This article draws directly from the insightful post “Las NIIFs (con S al Final),” authored by the expert Karen Wantland at Kwantland. Her analysis offers a comprehensive overview of the International Financial Reporting Standards (IFRS) and their evolution into the new IFRS S standards, which focus on sustainability-related disclosures. Below, we summarize and expand on their key points to highlight the importance of these standards for businesses worldwide.
About Karen Wantland
Karen Wantland is a writer, strategist, innovator, and advisor on Environmental, Social, and Governance (ESG) matters. With over two decades of experience, she has collaborated with companies and organizations to advance sustainability and social innovation. Karen is also a seasoned columnist, sharing her expertise through various media outlets, making her a respected thought leader in the ESG field.
Her contribution in the original article provides valuable clarity and actionable insights into the evolving landscape of ESG reporting, particularly the IFRS S standards.
What Are IFRS and IFRS S Standards?
As Karen Wantland´s article explains, International Financial Reporting Standards (IFRS) have provided a unified accounting framework for over two decades, ensuring transparency and comparability in financial statements across jurisdictions. The standards, developed by the International Accounting Standards Board (IASB), are mandatory in some countries and optional in others.
In response to the growing demand for sustainability-related reporting, the IFRS Foundation established the International Sustainability Standards Board (ISSB) in 2021. This board focuses on developing standards that guide companies in disclosing the financial implications of Environmental, Social, and Governance (ESG) issues. These are known as IFRS S standards, with the “S” emphasizing sustainability.
Key Features of IFRS S Standards
The IFRS S standards aim to enhance the quality of sustainability reporting by focusing on financial materiality, a concept drawn from the Sustainability Accounting Standards Board (SASB). Karen Wantland’s article highlights two key IFRS S standards:
- IFRS S1: General Requirements for Sustainability-Related Disclosures
- This standard mandates companies disclose material ESG risks and opportunities that could impact their financial performance, position, or cash flows over the short, medium, and long term.
- IFRS S2: Climate-Related Disclosures
- Focused on climate-related risks and opportunities, this standard requires companies to disclose their greenhouse gas emission reduction targets and strategies for adaptation and mitigation.
According to Karen Wantland, IFRS S standards are gradually being adopted globally, with countries like Mexico and Costa Rica already requiring compliance by 2026.
Why IFRS S Standards Matter
Karen Wantland’s analysis underscores the critical role of IFRS S standards in bridging the financial and sustainability reporting gap. By adopting these standards, companies can:
- Align sustainability and financial reporting for improved transparency.
- Identify ESG risks and opportunities that impact long-term performance.
- Build trust with stakeholders, regulators, and investors.
Karen Wantland’s Recommendations for Compliance
The original article provides valuable recommendations for businesses preparing to comply with IFRS S standards. Here are the key steps they suggest:
- Assess IFRS Requirements: Determine whether IFRS accounting standards are mandatory in your operating countries.
- Verify IFRS S Adoption: Check if IFRS S standards have been adopted locally and understand any jurisdiction-specific requirements.
- Define Financial Materiality: Use tools like the SASB Materiality Finder to identify ESG factors relevant to your business.
- Establish Decarbonization Goals: Measure your carbon footprint and set actionable reduction targets as per IFRS S2.
- Promote Cross-Department Collaboration: Encourage collaboration between financial and sustainability teams to integrate efforts.
Final Thoughts
Introducing IFRS S standards marks a significant step forward in sustainability reporting. By following Karen Wantland´s guidance provided in her articlle “Las NIIFs (con S al Final)”, businesses can ensure compliance, enhance transparency, and seize new opportunities in a world increasingly focused on sustainability.
At Green Initiative, we applaud Karen Wantland for her comprehensive breakdown of these critical standards. For further insights, visit the original Las NIIFs (con “S” al Final) article.
