KPMG staff get guide to ISSB and IFRS sustainability standards

The IFRS Foundation trustees announced the International Sustainability Standards Board on 3 November 2021 at COP26 in Glasgow, turning sustainability reporting from a loose mix of frameworks into something closer to a shared operating model for KPMG. For ESG advisory, audit, and finance teams, the pressure is no longer just to draft better narratives. It is to show where every sustainability figure came from, who controlled it, and how it will stand up when reporting and assurance meet.

From voluntary ESG reporting to a global baseline

The announcement followed strong demand from investors, companies, and policy makers including the G20, G7, IOSCO, and the Financial Stability Board. The ISSB was built to answer a market problem: too many voluntary sustainability frameworks, too little comparability, and not enough decision-useful information for capital markets.

The ISSB Standards establish a high-quality global baseline of investor-focused sustainability-related disclosures. For KPMG people working with clients who are still figuring out what sustainability reporting should look like in practice, the market is moving away from storytelling alone and toward information that can be used to assess cash flow, risk, and value creation.

What IFRS S1 and IFRS S2 require

The ISSB issued IFRS S1 and IFRS S2 on 26 June 2023. IFRS S1 sets the general requirements for disclosure of sustainability-related financial information, while IFRS S2 covers climate-related disclosures. Together, they give clients a common language for sustainability reporting that is meant to sit closer to mainstream financial reporting than the older patchwork of voluntary disclosures.

The standards also build on the TCFD framework and use industry-based information, including material tied to SASB Standards. That combination pushes reporting toward sector-specific, comparable data rather than generic corporate messaging. A utilities client and a bank may both disclose climate risk, but the underlying evidence, metrics, and assumptions will not look the same.

In practice, S1 and S2 change the shape of the work in three ways:

• They force teams to define which sustainability matters are financially material, and to connect those matters to the business model.

• They require more disciplined data collection, because disclosure language has to be supported by repeatable evidence, not one-off spreadsheet pulls.

• They make governance visible, since the people who own the data, review it, and sign it off now matter as much as the final report.

Where the workflow friction will show up

This is where KPMG clients usually feel the pain first. Sustainability information often sits across finance, operations, procurement, facilities, risk, and investor relations. ISSB reporting means those functions can no longer work in silos if they want a consistent disclosure package.

The friction usually appears in the handoff between the reporting team and the people who will later need to assure the numbers. If a metric is assembled late, without source documentation or version control, it may still make it into a draft report, but it will create problems when assurance starts asking how the number was calculated, whether the inputs were complete, and whether the assumptions were reviewed at the right level.

The practical challenge is not just disclosure content. It is evidence management. KPMG teams advising clients on ISSB readiness now need to think about controls over data lineage, roles and approvals, and how frequently the underlying information can be reproduced. If a client cannot show how it arrived at a climate metric in June, it will struggle to show the same thing again in October.

Why IOSCO endorsement matters for KPMG clients

IOSCO endorsed the ISSB Standards on 25 July 2023 and called on its members to consider ways to adopt, apply, or otherwise be informed by IFRS S1 and IFRS S2. That endorsement does not mean every market adopted the standards on the same timeline, but it does raise the likelihood that regulators will keep folding them into local rules over time.

For KPMG professionals, the planning question is how quickly clients will need to align their controls, evidence, and disclosure calendars with it. That affects advisory work, audit readiness, and the staffing burden on finance teams that already run hot during close and busy season.

What KPMG staff should use now

KPMG maintains an ISSB standards digital hub and a sustainability toolkit to help companies prepare for IFRS Sustainability Disclosure Standards. Its disclosure checklist is based on IFRS Sustainability Disclosure Standards effective as of 30 April 2025.

Those materials are a working bridge between policy and process. They help teams translate broad ISSB requirements into the nuts and bolts of project work: what evidence needs to exist, who owns it, how often it should be refreshed, and how it gets handed from the reporting function to assurance.

A practical ISSB workstream inside KPMG usually starts with the same questions:

• Which disclosures are in scope under S1 and S2 for this client?

• Which metrics already exist, and which need new controls or new data owners?

• What evidence will the assurance team expect to see, and when?

• Which parts of the reporting process still rely on judgment, and how is that judgment documented?