[Global Financial Insights] ISSB Issues Guidance on Industry-Based Sustainability Disclosures

Editorial Team – [2025] 176 Taxmann.com 555 (Article)

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. ISSB releases educational material on using industry-based guidance for sustainability disclosures

In July 2025, the International Sustainability Standards Board (ISSB) released new educational material titled “Using ISSB Industry based Guidance when applying ISSB Standards”. The material is designed to help preparers apply IFRS S1 and IFRS S2 effectively, by clarifying how to use the ISSB industry-based guidance comprising the Sustainability Accounting Standards Board (SASB) Standards and the Industry-based Guidance on Implementing IFRS S2. These resources assist entities in identifying relevant sustainability-related risks and opportunities and determining what disclosures are useful for primary users. While ISSB Standards require entities to “refer to and consider the applicability of” this guidance, its application is not mandatory.

The educational content outlines practical considerations for selecting relevant industries, assessing the applicability of disclosure topics and metrics, and determining the level of aggregation or disaggregation required for meaningful reporting. It emphasises that the ISSB industry-based guidance, while nonbinding, can reduce the cost and complexity of application, improve comparability, and enhance materiality judgments. It also includes examples and resources to guide preparers in evaluating relevance to their business models and value chains, especially in cases involving complex or multi-industry operations.

Additionally, the material emphasises the importance of connectivity and interoperability, particularly in relation to the European Sustainability Reporting Standards (ESRS), to facilitate consistent sustainability disclosures across jurisdictions. While the document does not modify existing IFRS requirements, it serves as a practical support tool for companies seeking to achieve transparent, high-quality sustainability-related financial reporting. It is particularly useful in the first year of implementation and encourages ongoing reassessment to reflect changes in business models or external conditions.

Source – International Sustainability Standards Board

2. Update on 2025 IFRS for SMEs supporting materials

The IFRS Foundation is progressively releasing updated educational modules to support the implementation of the 2025 IFRS for SMEs Accounting Standard (Third Edition), issued in February 2025. These modules are designed to help preparers, educators, auditors, and regulators understand and apply the revised requirements effectively ahead of its mandatory implementation for annual reporting periods beginning on or after 1 January 2027.

The updated modules correspond to each section of the revised Standard and include the following key features:

• The full text of the relevant section from the IFRS for SMEs Standard (2025 edition).
• Explanatory notes that highlight the underlying concepts, significant estimates and judgements, and differences from full IFRS Standards.
• Illustrative examples and case studies to demonstrate practical application.
• Multiple-choice questions with answers for self-assessment or classroom use.
• A summary of transition requirements, helping users manage the shift from the 2015 edition.

As of now, the IFRS Foundation has released updated modules for:

• Section 1 – Small and Medium-sized Entities
• Section 2 – Concepts and Pervasive Principles
• Section 7 – Statement of Cash Flows
• Section 11 – Basic Financial Instruments

More modules are expected to follow throughout 2025 and 2026, aligning with the IASB’s phased support strategy. The materials are available freely on the IFRS Foundation’s website and are intended to promote high-quality and consistent application of the Standard worldwide. However, it is essential to note that these modules are non-authoritative and do not replace the Standard itself.

For the latest releases and access to all modules, stakeholders are encouraged to regularly visit the IFRS Foundation’s official modules page.

Source – International Financial Reporting Standard

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