Will ISSB standards be mandatory for SMEs? How do SMEs stand to gain from aligning with ISSB standards?
Have you found yourself lost in the jargon-ridden maze of the new ISSB Standards, IFRS 1 and IFRS 2? If so, we’ve got your back. Our latest deep-dive aims to cut through the confusion and deliver a clear picture of how these standards promise to revolutionize the way Small and Medium-Sized Enterprises (SMEs) approach sustainability.
Battling with sustainability practices isn’t a walk in the park, particularly for SMEs. The newly established International Sustainability Standards Board (ISSB) has announced standards that aspire to make sustainability reporting simpler and more consistent for businesses. In the world of sustainability, these standards have emerged as potential game-changers.
RELEVANT SUSTAINABLE GOALS
International Sustainability Standards Board (ISSB) Standards
The new International Sustainability Standards Board (ISSB) standards help solve the problem of global reporting fragmentation, enabling clearer, more consistent reporting for SMEs. Learn how the standards can help your firm boost credibility and efficiency in your sustainability reporting.
Established by the International Financial Reporting Standards (IFRS) Foundation in 2021, the ISSB’s goal is to foster transparency and comparability in sustainability reporting, offering an inclusive baseline for global disclosures. With its first set of standards, IFRS S1 and S2, the ISSB has offered a common framework for all businesses, increasing trust and fostering better decision-making around sustainability.
As of January 1, 2024, a new set of standards will be operative in the annual reporting cycles. Crafted with the essence of simplicity and user-friendliness, these standards come with comprehensive instructions and exemplifications for a smoother implementation.
Thoughtfully malleable, the standards can flex around diverse legal, cultural, and economic landscapes in which businesses exist, thereby enabling adherence with marginal disturbance to regular operations.
Accommodating diversity, the standards are scalable to suit the varying degrees of organisational readiness. This permits a tiered adoption approach, allowing SMEs the luxury of prioritising the implementation of specific standards based on their resource bandwidth and needs.
Taking a broader view, the ISP framework integrates not just financial data but also includes non-financial parameters like Environmental, Social, and Governance (ESG) factors, making it a truly comprehensive tool.
Here’s the real question: “Are these standards mandatory for SMEs?” Not quite. While adoption isn’t yet compulsory, as local regulations evolve, these standards may align with global requirements. Already, the UK is leading the way, becoming the first country to mandate companies to make climate-related disclosures in 2022.
Unpacking the ISSB standards, they come with impressive features designed to benefit SMEs. They’re user-friendly, flexible, scalable, and account for a range of environmental, social, and governance (ESG) factors. These standards could be your ticket to improved reporting processes, international growth, and streamlined internal operations.
How do SMEs stand to gain from aligning with ISSB standards? Picture this: The labyrinth of ESG regulations simplified, credibility enhanced, and potential investors knocking at your door. Plus, you’ll be better equipped to manage sustainability-related risks and opportunities. As an SME, staying ahead of the curve and meeting international stakeholders’ expectations can give you a competitive edge in today’s global market.
In the shifting sands of sustainability, the ISSB Standards, IFRS 1 and IFRS 2, could be the stable ground SMEs need to make significant strides. Are you ready to take the leap?