ISSB Standards and the Future of Sustainability Reporting in Emerging Markets

A New Global Baseline

The International Sustainability Standards Board (ISSB) has established what will become the global baseline for sustainability reporting. IFRS S1 and S2 create comprehensive requirements for sustainability-related financial disclosures.

For companies in emerging markets, these standards present both challenges and opportunities.

Key Requirements

IFRS S1: General Requirements

Establishes the overall framework for sustainability-related financial disclosures, including:

• Governance of sustainability risks and opportunities
• Strategy for addressing sustainability matters
• Risk management processes
• Metrics and targets

IFRS S2: Climate-Related Disclosures

Specific requirements for climate-related disclosures, including:

• Scope 1, 2, and 3 greenhouse gas emissions
• Climate-related risks and opportunities
• Scenario analysis
• Transition plans

Emerging Market Implications

Adoption Timeline

Many emerging market jurisdictions are developing adoption timelines. ASEAN member states are coordinating on regional implementation, with most expecting mandatory adoption for large listed companies by 2027-2028.

Capacity Building

Significant capacity building is required. Many companies lack the systems, processes, and expertise to meet ISSB requirements. This creates demand for advisory services and technology solutions.

Competitive Dynamics

Early adopters will gain competitive advantage in accessing international capital. Investors increasingly require ISSB-aligned disclosures as a condition of investment.

Practical Challenges

Data Collection

Scope 3 emissions data is particularly challenging in emerging markets where supply chains may be informal or documentation limited.

Verification

Limited availability of qualified assurance providers in many emerging markets creates bottlenecks for verification.

Cost

Implementation costs can be significant relative to company resources, particularly for smaller listed companies.

Strategic Approaches

We recommend a phased approach to ISSB implementation:

Phase 1: Gap Assessment

Evaluate current capabilities against ISSB requirements. Identify priority areas and resource needs.

Phase 2: Foundation Building

Establish data collection systems, governance structures, and internal capabilities. Begin voluntary disclosure.

Phase 3: Full Implementation

Complete implementation of all requirements. Obtain external assurance.

Leadwood's ESG Practice

Our ESG advisory practice helps companies navigate ISSB implementation:

• Gap assessments and roadmap development
• System and process design
• Training and capability building
• Disclosure preparation and review

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For ISSB implementation support, contact our ESG practice at enquiries@leadwood.consulting.