International sustainability reporting is entering a new era. With investors and regulators pushing for consistent, comparable disclosures, companies worldwide are looking to the ISSB’s standards as a global baseline. 

In fact, jurisdictions representing over half of the world’s economy have already announced plans to use or align with the ISSB standards. This reflects growing pressure on companies to report how sustainability issues affect their business – from climate risks to social and governance challenges. 

The ISSB (International Sustainability Standards Board), under the IFRS Foundation, has issued its first two standards (IFRS S1 and IFRS S2) effective 2024, providing a framework for investor-focused sustainability reporting. 

These standards aim to give investors the “consistent, complete, comparable” information they need to assess companies’ sustainability-related risks and opportunities over the short, medium, and long term.

How should a company approach ISSB reporting in practice? We've put together a step-by-step guide built around ten core steps – from identifying relevant risks to preparing for assurance – to implement ISSB-aligned sustainability disclosure. 

Each step includes key activities, common challenges, and practical tips. While the focus is on ISSB’s investor-centric approach, we’ll note alignments with other frameworks (like SASB, TCFD, or ESRS) where useful. Follow these steps to navigate IFRS S1 (General Requirements) and IFRS S2 (Climate) in a structured, manageable way.

1. Do a risk and opportunity assessment

The foundation of ISSB reporting is a comprehensive sustainability risk and opportunity (R&O) assessment. Cast a wide net to identify all sustainability-related risks and opportunities that could reasonably affect your enterprise value. 

1.1. Start with well-known sources

for example, the SASB industry standards provide a materiality map of likely issues by sector, and you can review peer company reports or scientific research for sector-specific insights. If your company has conducted a double materiality assessment for ESRS reporting, you can reuse the list of issues identified – now focusing on the “outside-in” financial impacts.

1.2. Build a structured R&O register 

For each sustainability topic (climate change, resource scarcity, workforce, etc.), consider how it might impact your business’s cash flows, access to financing, or cost of capital. IFRS S1 defines sustainability-related risks and opportunities as those that could affect the company’s prospects (enterprise value) over the short, medium, or long term. Make sure to consider different time horizons as ISSB requires – for example, a climate risk might have minimal impact this year (short term) but significant impact in 5+ years (medium/long term). Capture those time frames in your assessment.

Practical tips

Engage cross-functional experts (sustainability, operations, finance, etc.) to brainstorm relevant R&Os. Be sure to include both risks (potential negative effects on your business) and opportunities (potential upside or competitive advantage from sustainability developments).

 Keep the scope broad initially – it’s better to start with a long list. If your industry has known environmental or social challenges (e.g. water use in mining, labor conditions in manufacturing), include them. This step often results in a “risk register” table listing each issue, with descriptions and references (like SASB code or ESRS reference) for easy follow-up.

2. Assess which R&Os are material

With a universe of potential sustainability topics identified, the next step is determining materiality – in other words, which issues truly merit disclosure to investors. ISSB uses an enterprise value lens (often called single materiality): an item is material if omitting it or misstating it could reasonably influence investor decisions. A simple litmus test is: “Would a reasonable investor change their mind about the company if they knew about this risk or opportunity?” If the answer is yes, the issue is likely material and should be disclosed; if no, it may be left out to avoid clutter.

2.1. Perform a qualitative materiality analysis on each R&O in your register

Consider the nature and magnitude of each risk or opportunity, and the likelihood of it impacting your business. Issues can be material due to magnitude (e.g. a potentially huge financial impact) or nature (e.g. related to core strategy or values), or a combination. 

2.2. Prioritize the list by high, medium, low materiality

Be company-specific – focus on what matters given your company’s circumstances, not generic sustainability themes. ISSB expects concise disclosures tailored to your business, and explicitly warns against over-disclosing immaterial information that could obscure what’s important.

Practical tips 

Document the rationale for each materiality judgement. For instance, “Water scarcity risk – material due to potential to disrupt 30% of production in our key region” or “Community relations – not material (our operations are in low-risk locations)”. 

This will help when drafting the report and in case auditors or stakeholders ask. It’s also useful to involve senior management here – materiality decisions often require judgment about strategic importance. If operating under multiple frameworks, remember that ISSB’s materiality is financial-centric. (By contrast, under EU’s ESRS you must consider impacts on society and environment too – a double materiality approach. 

Companies doing both can align the processes by identifying all issues and then applying the financial materiality filter for ISSB. The outcome of this step is a shortlist of material sustainability topics (risks/opportunities) that will form the focus of your ISSB-aligned report.

3. Link risks to strategy and planning

ISSB reporting isn’t just a checklist of risks – it requires explaining how those risks and opportunities affect your business and strategy. Step 3 is about taking each material R&O and embedding it into your strategic thinking. 

The IFRS standards explicitly ask companies to disclose the effects of each material risk or opportunity on “the company’s business model and value chain; the company’s strategy and decision-making; and its resource allocation and capital deployment”. In other words, how is sustainability altering what your business does, how you do it, and where you direct resources?

Step 3.1. Review business model and value chain

Start by examining how each material risk or opportunity affects your business model and value chain. For example, if climate change is a material risk, is it leading to changes like sourcing renewable energy, redesigning products, or relocating facilities? If workforce diversity is a material issue, consider how it influences your talent strategy or value creation.

Step 3.2. Assess strategic and decision-making impacts

Next, assess whether these issues are shaping your overall corporate strategy or major decisions. For instance, are climate-related risks prompting a shift toward low-carbon products? Are these risks discussed at board level, leading to new policies or initiatives? Capture how sustainability considerations are influencing direction and governance.

Step 3.3. Link to resource allocation and capital planning

Then, connect each material issue to how resources are allocated. ISSB reporting requires showing how sustainability is embedded in financial planning. For example, if the circular economy presents an opportunity, have you invested in new recycling facilities? If regulatory compliance is a risk, are you funding systems or training to address it? This demonstrates that sustainability is integrated into your investment and budgeting decisions.

Practical tips

This step often highlights gaps – areas where a material issue lacks a clear strategic response or resources. Treat this as a signal for management action. Involve strategy and finance teams early to ensure alignment across the business. 

Where possible, link each risk to existing strategies or goals, such as connecting climate risks to your climate strategy or mission. This input feeds directly into the “Strategy” section of your ISSB report, so gather clear, specific examples. Disclosures should reflect not just your current strategy, but how it will evolve.

4. Run climate resilience and scenario analysis

For climate-related risks and opportunities, ISSB (via IFRS S2) places special emphasis on climate resilience. Companies are expected to assess how resilient their strategy is in the face of different climate scenarios. Note that this step is likely the most complex.

In practice, this means conducting a climate scenario analysis – an exercise in which you evaluate your business under at least a couple of plausible future climate outcomes. Typically, you would include a well-below 2°C scenario (aligned with Paris Agreement goals, e.g. a 1.5°C scenario) and a higher-emissions scenario (e.g. 3°C+ by end of century). 

The goal is to test your strategy against both an aggressive climate policy world and a business-as-usual world, to see if you withstand risks like physical climate impacts or transition costs.

Step 4.1. Conduct climate scenario analysis

Begin by selecting at least two plausible climate scenarios. One should represent a low-warming future (such as a 1.5°C or well-below 2°C scenario, aligned with the Paris Agreement), and another should represent a high-warming future (such as a 3°C or 4°C scenario). This helps evaluate how your business might perform under both aggressive climate policy and business-as-usual conditions.

Step 4.2. Define variables, assumptions, and impacts

For each scenario, identify the key assumptions and variables. In low-warming scenarios, consider factors like rising carbon prices, increasing adoption of clean technology, and stricter regulation. In high-warming scenarios, look at more frequent extreme weather events and supply chain risks. Evaluate how these affect your operations, costs, revenues, and market opportunities. Where possible, quantify the effects – for example, identifying facilities exposed to water stress or forecasting carbon cost impacts.

Step 4.3. Evaluate financial and strategic implications

Assess the financial impacts across scenarios, even if only semi-quantitatively. These could include shifts in operating costs, asset values, or new revenue opportunities. Then, evaluate how resilient your overall strategy is in each case. You might find that diversification into low-carbon products supports resilience in a 2°C world, while physical exposure weakens resilience in a 4°C world.

Step 4.4. Document methodology and results

Clearly record the scenarios used, assumptions made, time horizons considered, and the outcomes of your analysis. ISSB-aligned disclosures should show the strategic implications of climate risks and how your business may adapt. Refer to TCFD guidance, which underpins IFRS S2, especially the prompt to describe the resilience of your strategy in a 2°C or lower scenario.

Practical tips

Scenario analysis can be data-intensive and unfamiliar, so start simple if needed. Use existing scenarios from credible sources like the IEA or IPCC. Focus on material climate variables for your sector – for example, energy companies should look at demand changes, while agriculture might focus on precipitation. 

Engage stakeholders through workshops or expert consultations to assess impacts. Even qualitative analysis is valuable if you lack full modeling capabilities. Be sure to assess both transition and physical risks. 

Let the analysis inform strategy: if it highlights vulnerabilities, document any planned adaptations. This shows investors that you are actively managing climate risks. The output from this step will contribute to the climate section of your Strategy disclosure, demonstrating how you’ve tested and strengthened your business approach under climate uncertainty.

5. Assess financial impacts and refine risk management

An important (and challenging) step is to translate your material sustainability issues into financial terms. Investors ultimately care about dollars and cents: how will these sustainability risks or opportunities impact revenue, costs, assets, liabilities, or capital access? 

For each material R&O, perform an impact assessment to estimate current and future financial effects. For example, if you identified a risk of supply chain disruption due to climate events, estimate how that could affect annual revenue or incur extra costs (e.g. “a major flood could cost $5 million in lost output”). If an opportunity is adopting a new green product line, project the potential revenue or margin uplift. This step often involves scenario outputs (from Step 4) and further analysis by your finance team.

Step 5.1. Translate material issues into financial terms

For each material sustainability risk or opportunity, assess how it could affect your financials – revenue, costs, assets, liabilities, or capital access. Investors want to understand the financial significance. If climate-related supply chain risks were identified, estimate the potential cost of disruptions or lost output. If a green product line is an opportunity, forecast the expected revenue or margin gains. These estimates often rely on outputs from your scenario analysis in Step 4, combined with finance team input.

Step 5.2. Include current and future financial effects

Beyond future projections, identify any current period impacts. For example, note if extreme weather events this year affected earnings, or if carbon pricing increased your operating costs. Consider upcoming risks to your financial position too, such as potential asset impairments or stranded assets. Evaluate whether new sustainability regulations could introduce liabilities or provisions. This step overlaps with risk management – think about insurance, reserves, or control measures.

Step 5.3. Quantify when possible, explain when not

ISSB standards recognize that financial quantification can be difficult. If reliable data isn’t available, provide a clear qualitative description. When you can’t assign exact figures, outline the likely direction and relative scale of impact – for example, a material long-term increase in costs, but low short-term effects. Avoid leaving any material issue without some form of financial interpretation. Even qualitative statements give investors insight into your understanding and preparedness.

Practical tips

Bring in your finance and risk management teams to help quantify impacts – this step often resembles enterprise risk management. Leverage any existing ERM models, stress testing, or insurance data. Prioritize the most measurable and material items, like carbon costs, regulatory fines, or green product revenue. Use ranges or scenario-based figures to account for uncertainty. 

This is also a good time to review and strengthen risk controls: make sure each major risk has a clear owner and a mitigation plan. Where operational changes or internal controls are needed, begin implementing them. 

These improvements will support future assurance readiness (see Step 9). By quantifying and contextualizing impacts, you’ll gain a sharper understanding of which sustainability issues truly matter financially. 

6. Respond to ISSB metrics (including Scope 1–3 emissions)

ISSB standards require companies to report specific metrics and indicators for their material sustainability topics – especially on climate. This step is about collecting data and calculating the metrics you’ll need to disclose. 

A top priority for any climate-related disclosure is greenhouse gas (GHG) emissions. IFRS S2 explicitly mandates disclosure of Scope 1, Scope 2, and Scope 3 emissions, measured in accordance with the Greenhouse Gas Protocol. 

Step 6.1: Prepare emissions inventory for climate disclosure

ISSB standards, via IFRS S2, require disclosure of greenhouse gas emissions across Scope 1 (direct emissions), Scope 2 (purchased electricity), and Scope 3 (value chain). These must be measured using the Greenhouse Gas Protocol. Build a complete, up-to-date inventory that reflects your business model. For Scope 3, focus on the most relevant categories – such as purchased goods, transport, or business travel. Estimates are acceptable, and it’s fine to note any gaps or omissions, especially in the first year, as ISSB allows temporary relief for Scope 3 disclosures.

Step 6.2: Identify metrics for each material issue

Beyond emissions, identify appropriate metrics for all material sustainability risks and opportunities. IFRS S1 requires companies to disclose the metrics that management uses to monitor each issue. If these aren’t yet defined, use the ISSB’s recommended approach by referring to SASB’s industry-specific standards. For example, water risk might be tracked through metrics like water withdrawal, while workforce safety could involve injury rates or training hours. SASB, TCFD, and GRI offer helpful frameworks to choose credible, investor-relevant metrics.

Step 6.3: Collect data and calculate metrics

Once metrics are selected, begin gathering data across departments. This includes energy data for emissions, procurement inputs for Scope 3, and HR records for workforce metrics. Apply consistent methodologies – for example, using emission factors from the GHG Protocol or standardized definitions for HR indicators. Document any assumptions or calculation methods used. Validate the data through trend analysis and benchmarking to ensure accuracy. If you encounter data gaps, disclose them transparently and outline how you plan to close them in the future.

Practical tips

Leverage any tools or software you have for data collection – many companies use sustainability platforms or spreadsheets with defined templates. Breaking the work into smaller pieces helps: energy managers can gather Scope 1 and 2 data, procurement can address parts of Scope 3, HR can handle social metrics, and so on. 

Centralize the data afterward. Consider using the SASB Materiality Map as a checklist – it helps ensure you're aligning with investor expectations and simplifies internal conversations. Pay attention to units and normalization: while ISSB doesn’t require intensity metrics, normalizing (e.g. emissions per unit revenue) adds useful context. 

Internally, compiling your data into a KPI spreadsheet or dashboard can support decision-making and feed directly into future steps, like target-setting and performance tracking. High-quality data builds trust and will prepare you for future assurance requirements, even if it’s not yet mandatory.

7. Set up climate-related targets (and other sustainability goals)

ISSB standards ask companies to disclose targets related to sustainability risks and opportunities, especially climate targets. If your company has public goals – for example, a net-zero emissions by 2040 target, a renewable energy usage target, or a diversity and inclusion goal – these need to be reported along with progress. 

Step 7.1: Take stock of existing sustainability targets

Begin by compiling all current sustainability goals your company has publicly committed to – these may relate to emissions, energy, waste, diversity, or other material areas. For each target, record key details such as the base year, target year, scope, and quantitative goal. 

For example, “Reduce Scope 1 and 2 GHG emissions by 50% by 2030 from a 2019 baseline.” Investors and ISSB standards expect this level of detail, along with a progress update based on the latest available data.

Step 7.2: Establish climate-related targets if missing

IFRS S2 requires disclosure of any climate-related targets – whether voluntary or legally mandated – and the metrics used to measure progress. If your company hasn’t yet set climate goals, consider creating at least one, even if it is modest or qualitative. Otherwise, your ISSB report will need to state that no targets exist, which may raise concerns with investors. Some companies align with science-based targets (SBTi) or national goals, but only do so if you can back the commitment with a credible implementation plan.

Step 7.3: Set goals for other material sustainability topics

While the ISSB does not require companies to create new targets beyond climate, it does require disclosure of any that exist. For each material topic – such as water use, safety, or circularity – evaluate whether a formal target would help demonstrate that the risk or opportunity is being proactively managed. If new targets are set, ensure they are realistic, measurable, and supported by action plans. Tie each target to specific metrics identified in Step 6 to ensure consistent tracking.

Practical tips

Present your targets in a clear table format showing the metric, baseline value and year, target value and year, and latest performance status. For climate goals, specify whether the target is absolute or intensity-based, and which emissions scopes (1, 2, and/or 3) are included. Many companies also include a summary of the strategy to meet each target – for example, “net-zero by 2040, to be achieved through energy efficiency, fleet electrification, and carbon offsets.” If you don’t have formal targets, you can disclose internal benchmarks, like an internal carbon price or a risk threshold.

8. Design the report around ISSB’s four pillars

Now it’s time to compile and structure your ISSB-aligned disclosure. Both IFRS S1 and S2 follow the classic TCFD structure of four core content areas: Governance, Strategy, Risk Management, and Metrics & Targets. Organizing your report (or report section) around these pillars ensures you meet all the disclosure requirements in a logical flow. Here’s how to approach it:

Step 8.1: Governance – who oversees sustainability

Describe how your company governs sustainability issues. This includes the role of the Board of Directors (e.g. which committee oversees sustainability, how often it’s discussed, and the board’s expertise) and the role of management (e.g. presence of a Chief Sustainability Officer or ESG committee). Clarify how oversight is exercised and who is accountable. This section should answer: “Who’s in charge, and how are risks and opportunities being governed?”

Step 8.2: Strategy – how sustainability affects the business

This section should integrate your analysis from Steps 1–5. Summarize the material risks and opportunities identified and explain how they affect your business model, strategy, and financial planning. Include results from your climate scenario analysis, showing how your strategy performs under different climate futures (such as a 2°C scenario). Also discuss your transition plans and any strategic responses to sustainability risks. Clearly present both current and anticipated financial impacts.

Step 8.3: Risk management – how risks are identified and managed

Outline your process for identifying, assessing, and managing sustainability-related risks. Show how these risks are integrated into your broader enterprise risk management system. For example, explain how often risks are reviewed, how they’re prioritized, and what mitigation measures are in place. If you introduced new controls or escalation processes during this work, describe them briefly. This section builds investor confidence in your internal processes.

Step 8.4: Metrics & targets – what you measure and aim to achieve

Present the key quantitative disclosures from Steps 6 and 7. Include your GHG inventory (Scopes 1, 2, 3), plus any industry-specific metrics tied to your material topics. Provide current values, comparisons with prior years, and any targets along with progress toward them. A simple table works well for this. Also explain your measurement methods (e.g. use of the GHG Protocol) and note if any data has been verified or assured. Focus on material metrics, and use visuals like charts where helpful.

Practical tips

Map each IFRS S1 and S2 requirement to the relevant section of your report in a checklist or outline to ensure full coverage. This is especially useful for referencing specific IFRS paragraph numbers. 

Make sure the report connects with your financial disclosures – for example, if climate impacts are discussed in the Strategy section, corresponding financial notes should reflect them. 

Finally, ask someone outside the drafting team to review the structure for clarity. The goal is not just compliance, but a decision-useful report that communicates clearly with investors. A well-structured report also sets the foundation for your next reporting cycle and supports a smooth wrap-up of your ISSB implementation.

9. (Optional) Prepare for limited assurance

As sustainability reporting matures, assurance is becoming the norm. While the ISSB standards themselves do not require obtaining assurance on your disclosures, they are designed to be assurable – and many jurisdictions and stakeholders are moving in that direction. 

Even where not yet mandatory, obtaining assurance voluntarily can significantly strengthen the credibility and trustworthiness of your sustainability disclosures. It signals to investors and other stakeholders that your company takes sustainability data as seriously as financial information. This step focuses on preparing your data, documentation, and processes to be assurance-ready.

Step 9.1: Identify what may be subject to assurance

Start by pinpointing which disclosures are likely to fall within scope – usually quantitative metrics like GHG emissions, energy and water use, and any claims or targets. Tag these items in your report and ensure each has a clear audit trail, including source data, responsible contributors, and calculation methods.

Step 9.2: Strengthen internal controls and documentation

Evaluate the internal controls you have in place for sustainability data. These should mirror financial reporting processes where possible such as second-person reviews, validation checks, and department-level sign-offs. Fill any gaps. For instance, if Scope 3 data was collected informally, formalize the process with standardized templates and a review protocol. For complex metrics or calculations, prepare concise methodology notes to explain how values were derived.

Step 9.3: Prepare supporting evidence for key claims

Collect documentation to support every significant claim or target. If you state “100% renewable electricity,” back it with certificates or bills. If you mention using an internal carbon price, provide policy documents or board minutes. Assume that every material disclosure will be challenged with “prove it” – and prepare accordingly. Building evidence packs not only supports assurance but improves internal data confidence.

Step 9.4: Consider a mock audit or gap review

Conduct a dry run audit or verification with internal audit or an external consultant. This will highlight issues early and help you address them before facing formal assurance. It also gives your team a sense of what to expect and improves readiness for future regulatory changes.

Practical tips

If your company already has a financial audit process, involve that team or borrow their approach to flag high-risk or material data. Train finance and audit staff on sustainability topics or bring in specialists if needed. 

Be open about any limitations in your disclosures – transparency builds trust. For instance, note when certain Scope 3 categories rely on estimates or when primary data is lacking. Assurance providers prefer such candid disclosures, as they show awareness and commitment to improvement. 

Preparing for limited assurance not only future-proofs your reporting but also increases the credibility and investor confidence in your ISSB disclosures – even before assurance becomes mandatory.

10. (Optional) Conduct external stakeholder iteration

Finally, consider an external review and feedback loop on your ISSB disclosure before and after it’s published. While ISSB reports are investor-focused, the perspective of stakeholders like investors, analysts, board members, or even NGOs can be invaluable to refine your reporting. 

Step 10.1: Seek early external feedback before publishing

Even though ISSB disclosures are investor-focused, feedback from a select group of stakeholders – such as investors, ESG analysts, board members, or NGOs – can greatly improve the quality and usefulness of your report. Consider sharing a near-final draft (excluding any confidential sections) under NDA with a small review panel. Provide guiding questions to steer their input, such as whether anything is unclear or missing, if metrics are well-presented, or whether the narrative is too technical. This structured approach can help identify gaps or clarity issues before your report goes public.

Step 10.2: Engage the board and assurance providers

Your board of directors should review the draft report to ensure it aligns with their understanding of company strategy and risks. If your report is part of your annual report, this review may be required. If you’ve prepared for assurance (Step 9), loop in your assurance providers as well – they can suggest clarity improvements or highlight missing documentation.

Step 10.3: Continue engagement after publication

After publishing, remain open to questions and feedback from investors, ESG rating agencies, or other stakeholders. Consider setting up a dedicated feedback channel, such as an email or survey. Treat this feedback as valuable input for your next reporting cycle. Closing the loop helps improve your report’s clarity and relevance while demonstrating commitment to transparency and continuous improvement.

Practical tips

When sharing drafts externally, be clear about confidentiality and the purpose – focus reviewers on major issues, not copy edits. Document the feedback you receive and your decisions on whether to act on it. If certain suggestions aren’t feasible in the current cycle, note them for next year. 

Let reviewers know how their input influenced the final report – it builds goodwill and shows appreciation. Use review discussions as an opportunity to educate key stakeholders on your sustainability efforts. 

Getting started

By following these ten steps, companies can approach ISSB reporting in a methodical and effective way. From pinpointing what really matters, to embedding it in strategy, to getting the numbers right and the narrative tight, each step builds toward a comprehensive sustainability disclosure that meets global investor expectations. 

Sustainability, operations, and finance teams will need to collaborate throughout – which is itself a positive outcome, breaking silos between ESG and finance. The end result should be an ISSB-aligned report that not only complies with the standards but also genuinely informs decision-makers.

Remember, ISSB reporting is a journey of continuous improvement. Each reporting cycle, the process will get smoother: data quality will improve, internal awareness will grow, and strategic alignment will deepen.