The effective date for both IFRS S1 and IFRS S2 is 1 January 2024, with early adoption permitted. This means that companies will need to start preparing for these new reporting requirements well in advance to ensure they can meet the standards by the deadline. However, the ISSB has provided several transitional reliefs to help companies adapt to the new standards, particularly in the early stages of implementation.

One of the key transitional provisions is the timing of reporting. In the first year of adoption, companies can publish their sustainability-related financial disclosures within nine months of the end of the annual reporting period. This extended timeline gives companies additional time to gather the necessary data and build the internal processes required for compliance. In subsequent years, companies will need to align their sustainability reporting with their financial reporting timelines, ensuring that both sets of disclosures are published simultaneously.

Another important transitional relief relates to comparative information. In the first year of applying the IFRS Sustainability Disclosure Standards, companies are not required to provide comparative information from the previous reporting period. This relief acknowledges that companies may need time to establish baseline data and metrics for their sustainability reporting. However, in subsequent years, companies will need to provide comparative information to allow stakeholders to track progress over time.

For greenhouse gas (GHG) emissions, the ISSB has provided specific relief for companies using measurement methods other than the GHG Protocol Corporate Standard. In the first year of application, companies are permitted to continue using their existing measurement methods, giving them time to transition to the GHG Protocol. Additionally, companies are not required to disclose Scope 3 emissions (indirect emissions from the value chain) in the first year of adoption. This relief is significant, as Scope 3 emissions are often the most challenging to measure and report.

The ISSB has also addressed the issue of subsequent events in the context of the extended reporting timeline. Companies that take advantage of the nine-month reporting window will need to consider events that occur after the end of the reporting period but before the sustainability-related financial disclosures are authorized for issue. If these events could reasonably be expected to influence the decisions of primary users, companies are required to disclose them.

In summary, the ISSB has provided a range of transitional reliefs to help companies adapt to the new sustainability disclosure standards. These provisions recognize the challenges companies may face in implementing the standards, particularly in the early stages. By allowing additional time for reporting, exempting certain disclosures in the first year, and providing flexibility in measurement methods, the ISSB aims to ensure a smooth transition to the new reporting requirements while maintaining the quality and comparability of sustainability-related financial information.