The Growing Concern of Sustainability Disclosures – A Course for a Better Tomorrow

As an intern at Frontline for Climate Action, my role centres on advocacy and policy. Drawing on my background in accounting and reporting, I have taken it upon myself to educate the public on the importance of sustainability reporting.

For decades, companies have prioritised increasing shareholder returns. As a result, corporate reports have largely focused on financial performance. But this raises an important question: do companies operate in a vacuum?Obviously not.

Companies operate within communities and societies, and their activities have real social and environmental impacts. Consequently, organisations owe these communities meaningful disclosures on how their operations affect people, the environment, and society at large. This reality has driven the growing concern around sustainability reporting. Many large organisations now acknowledge that their responsibilities extend beyond shareholders to a wider group of stakeholders.

In response to this need, the International Sustainability Standards Board (ISSB) was established by the IFRS Foundation in 2021. Its objective is to develop a global baseline of sustainability disclosure standards that complement IFRS Accounting Standards. To date, two standards have been issued, both effective from 1 January 2024. However, their application remains voluntary, unless mandated by corporate reporting regulators within a given jurisdiction.

The first standard, IFRS S1 – General Requirements for the Disclosure of Sustainability-related Financial Information, sets out a comprehensive framework for sustainability disclosures. The second, IFRS S2 – Climate-related Disclosures—which is the primary focus of Frontline for Climate Action—applies this framework specifically to climate-related issues. Both standards aim to ensure that sustainability information is not treated as a side note, but as essential data for economic decision-making. Climate risk is a financial risk and ignoring it places businesses, economies and communities at risk.

Looking ahead, the ISSB will develop additional standards on other sustainability topics, including biodiversity and ecosystems, human capital, and human rights, all anchored on the framework established in IFRS S1. These are areas that directly affect livelihoods, equity and long-term economic resilience.

What Format Should These Disclosures Follow?

Both IFRS S1 and IFRS S2 require entities to disclose sustainability-related risks and opportunities under four key pillars:

     Governance – Who is responsible?

     Strategy – How are sustainability risks and opportunities shaping business decisions?

     Risk Management – How are these risks identified, assessed and managed?

     Metrics and Targets – How is progress measured, tracked and improved?

This structure enables users to understand both the potential negative and positive effects arising from sustainability issues, how organisations are managing them, and how effectively they are performing. This allows stakeholders to assess not just what companies say, but what they do.

In subsequent write-ups, I will explore these four pillars in greater detail, with a particular focus on IFRS S2 and climate-related disclosures, which lie at the core of Frontline for Climate Action’s mission. Advocacy begins with awareness and awareness must lead to action.

The future demand transparency

The climate demands accountability

Watch this space.

Benedict Opare

Volunteer

Frontline for Climate Action