IFRS sustainability disclosure standards are designed to help businesses communicate how sustainability-related risks and opportunities can impact their financial health. These disclosures aren’t just about environmental reporting — they are about giving investors and stakeholders a clear picture of how sustainability issues influence a company’s operations, strategy, and performance. Identifying these issues is the first step in aligning with IFRS standards, especially in the USA, where companies are preparing for stricter regulatory requirements.

The International Sustainability Standards Board (ISSB), under the IFRS Foundation, emphasizes disclosures that support decision-making for capital providers. This means that the sustainability issues a business chooses to report must have financial relevance, not just reputational value.

Conduct a Materiality Assessment

A materiality assessment is essential in identifying which sustainability issues are significant enough to disclose. This involves analyzing which environmental, social, or governance (ESG) topics could influence investor decisions or impact the business financially. The goal is to prioritize issues that are relevant to stakeholders and have a measurable influence on business outcomes.

Materiality is central to the IFRS approach. Businesses should evaluate both internal and external factors — internal operations, employee concerns, supply chain impacts, and external expectations from regulators, investors, and customers.

Engage with Stakeholders Across All Levels

Understanding which sustainability topics matter to stakeholders is critical. Stakeholders include investors, employees, suppliers, regulators, customers, and even local communities. Engaging with them provides a broader perspective on which ESG issues could pose risks or create opportunities.

Surveys, interviews, and feedback loops can help uncover areas of concern or interest. For instance, employees might highlight safety or diversity issues, while investors may focus more on climate risk or ethical governance. Capturing these perspectives can help businesses build a disclosure strategy that is both authentic and aligned with IFRS sustainability disclosure principles.

Align Sustainability Issues with Financial Impact

IFRS sustainability disclosure is not about listing all possible ESG topics — it's about highlighting those with a real or potential financial impact. Once relevant sustainability issues are identified, companies must assess how these issues affect cash flows, business value, liabilities, or future growth.

For example, if climate change increases the cost of raw materials or causes supply chain disruptions, it becomes a financially material issue. Similarly, if poor labor practices lead to higher turnover or legal liabilities, these must be considered part of the sustainability disclosure. Always link sustainability issues back to the financial story of the business.

Use Industry Benchmarks and Frameworks for Comparison

Looking at peers within your industry can provide valuable insights into what sustainability issues are typically considered material. Reviewing the sustainability reports of competitors or industry leaders can help businesses identify patterns in what is disclosed and why.

The IFRS sustainability disclosure guidelines encourage consistency and comparability across industries. Leveraging resources such as SASB materiality maps, CDP questionnaires, or GRI databases can help refine your understanding of sector-specific ESG risks and opportunities.

Organize Sustainability Issues Under Key IFRS Reporting Areas

The ISSB framework under IFRS divides disclosure requirements into four key areas: governance, strategy, risk management, and metrics & targets. Once you’ve identified your core sustainability issues, map them to these categories.

• Governance: Who is responsible for managing sustainability issues?
  
  

• Strategy: How are these issues embedded into long-term business planning?
  
  

• Risk Management: What processes are in place to assess and address these risks?
  
  

• Metrics & Targets: How do you measure performance and progress?

This structure ensures that your disclosures are not only complete but also easy to interpret by investors and regulators, especially those in the USA who are becoming more attuned to global ESG standards.

Reassess and Update Regularly

Sustainability is a dynamic field. What’s relevant today may shift tomorrow due to changing regulations, stakeholder expectations, or new scientific insights. That’s why companies must continually reassess their identified sustainability issues and update disclosures accordingly.

Regular reviews ensure that your sustainability reporting remains relevant, decision-useful, and aligned with IFRS sustainability disclosure expectations. It also helps businesses stay ahead of upcoming compliance requirements and shifting investor priorities in the evolving US market.