IFRS: Disclosing Anticipated Financial Effects under ISSB Standards

Posted 26 September 2025 Written by Acts Online
Category Sustainability Reporting

Brought to you by SA Accounting Academy: The International Sustainability Standards Board (ISSB) has issued new educational guidance to support the application of disclosure requirements regarding the anticipated financial effects of sustainability-related risks and opportunities.

In terms of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, companies are required to disclose information that enables investors to understand the effects of sustainability-related risks and opportunities on an entity’s financial position, financial performance, and cash flows. This includes effects reflected in the current financial statements and those anticipated over the short, medium, and long term.

The educational material focuses primarily on climate-related risks and opportunities under IFRS S2, but the ISSB notes that the requirements for disclosing anticipated financial effects are identical across all sustainability-related risks under the standards. The guidance aims to address stakeholder feedback regarding the complexity of reporting forward-looking financial impacts.

Core Disclosure Requirements

The ISSB Standards require an entity to disclose information about:

  • How sustainability-related risks and opportunities have affected its financial position, financial performance, and cash flows for the reporting period (current financial effects).
  • How the entity expects its financial position to change over time, given its strategy to manage these risks and opportunities (anticipated financial effects).
  • The anticipated effects on financial performance and cash flows over the short, medium, and long term.
  • The interoperability between these requirements and the corresponding disclosure mandates in the European Sustainability Reporting Standards (ESRS).

The guidance provides illustrations on how to apply these requirements, emphasizing that information about anticipated financial effects provides a complementary perspective to the historical data contained in traditional financial statements.

Click here to download the 23-page document: Disclosing information about anticipated financial effects

What this means for you, your business, or your clients

  • For yourself: Review the 23-page educational guide to identify specific quantitative disclosure requirements and technical methodologies for reporting anticipated financial effects under IFRS S1 and S2.
  • For your business: Update the firm’s sustainability reporting templates and internal data collection processes to ensure they can capture and model forward-looking financial impacts on cash flows and performance.
  • For your clients: Conduct a gap analysis for clients to determine if their current risk management systems provide sufficient data to project future financial impacts on their balance sheets as required by the ISSB framework.

Originally published at https://accountingacademy.co.za/news/read/ifrs-disclosing-information-about-anticipated-financial-effects-applying-issb-standards

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