IFRS S1 Compliance Checklist: Ensuring Your Company Meets The New Standards

The International Financial Reporting Standards (IFRS) S1 establishes a structured framework for companies to disclose sustainability-related financial information. Designed to enhance transparency, this reporting standard helps businesses provide consistent and reliable insights into sustainability risks and opportunities that may impact their financial performance.

For companies in the United States aiming to align with IFRS S1, this compliance checklist provides a step-by-step approach to meeting the requirements effectively.

1. Understand the Scope and Purpose of IFRS S1

IFRS S1 requires companies to disclose material sustainability-related risks and opportunities that could influence their financial prospects. This means organizations must assess how environmental, social, and governance factors impact cash flows, costs, and overall business resilience.

2. Establish Governance and Oversight

A strong governance structure is critical to ensuring compliance. Companies should:

• Define clear roles and responsibilities for sustainability reporting.
• Integrate sustainability oversight into existing financial governance.
• Assign accountability to executive leadership or board committees.

3. Identify and Assess Material Sustainability Risks

Conduct a thorough materiality assessment to determine the sustainability risks and opportunities most relevant to your business. This process should consider:

• Industry-specific sustainability concerns.
• Potential financial impacts of sustainability-related risks.
• Long-term implications for investors and stakeholders.
  

4. Integrate Sustainability into Business Strategy

IFRS S1 compliance requires companies to show how sustainability-related risks and opportunities influence business strategy. To meet this requirement:

• Assess how sustainability factors affect business operations and long-term growth.
• Incorporate sustainability-related goals into corporate planning.
• Align financial decision-making with sustainability objectives.

5. Enhance Risk Management Processes

Sustainability risks should be managed within the company’s broader risk framework. Businesses should:

• Develop formal processes for identifying and monitoring sustainability-related risks.
• Ensure sustainability risks are integrated into enterprise risk management (ERM).
• Establish controls for consistent reporting and compliance.

6. Define and Track Performance Metrics

To ensure compliance, companies must set measurable sustainability targets and track their progress. This includes:

• Identifying relevant sustainability metrics based on industry standards.
• Establishing internal tracking systems for reporting consistency.
• Regularly updating stakeholders on sustainability-related performance.

7. Align Reporting with Financial Disclosures

IFRS S1 requires sustainability-related disclosures to be presented alongside financial statements. Companies should:

• Ensure reporting timelines match financial reporting periods.
• Use clear, comparable metrics for sustainability-related financial disclosures.
• Maintain documentation to support audit readiness.

8. Utilize Technology for Efficient Data Collection

Leveraging digital platforms like Speeki can simplify the process of collecting and reporting sustainability data. Automated reporting tools help organizations:

• Streamline compliance with IFRS S1 and S2 reporting standards.
• Reduce errors and inconsistencies in sustainability data.
• Generate reports that align with investor and regulatory expectations.

9. Stay Updated on Regulatory Developments

Sustainability reporting standards continue to evolve. To maintain compliance:

• Monitor updates from the International Sustainability Standards Board (ISSB).
• Engage with industry groups and regulatory bodies on best practices.
• Ensure internal teams are aware of changing requirements.

10. Seek Independent Assurance for Credibility

While not mandatory, external assurance can enhance the credibility of sustainability disclosures. Companies should:

• Engage independent experts to review sustainability reports.
• Conduct internal audits to verify reporting accuracy.
• Implement continuous improvements based on assurance findings.

Conclusion

By following this checklist, U.S. companies can align with IFRS S1, improve sustainability-related financial reporting, and build greater trust with investors and stakeholders. Implementing a structured approach to compliance ensures that sustainability risks and opportunities are accurately represented in financial disclosures.