ISSB Adoption Reaches 35 Jurisdictions as Brazil Retreats and South Korea Expands

As of July 22, 2026, 35 jurisdictions have adopted the International Sustainability Standards Board's IFRS S1 and IFRS S2 standards on a voluntary or mandatory basis, with 11 more planning future adoption. The quarter saw genuinely divergent trajectories: Brazil's securities regulator removed mandatory ISSB reporting in favour of a "comply or explain" approach, while South Korea moved to expand the scope of companies subject to ISSB-aligned reporting, citing energy price volatility linked to the Middle East conflict.

 

Why the Nature-Related Practice Statement's Optional Structure Matters

 

The ISSB decided in April 2026 to publish, by October 2026, a draft of nature-related disclosure requirements structured as an IFRS practice statement rather than a mandatory third standard. That structural choice carries real significance: companies applying IFRS S1 and IFRS S2 would not be required to follow the practice statement to comply with ISSB standards, meaning it would only become mandatory if an individual jurisdiction specifically chooses to require it. That optional structure gives jurisdictions considerably more flexibility in how they adopt nature-related disclosure compared with the core climate standards, potentially resulting in far more fragmented nature disclosure practices across different markets than the currently more standardised climate reporting landscape.

The practice statement will nonetheless include requirements beyond what IFRS S1 currently covers, including nature-related scenario analysis to test business resilience against nature-related risks, and disclosure of the amount and percentage of assets or business activities vulnerable to those risks. The ISSB plans to draw on the Taskforce on Nature-related Financial Disclosures for this work, mirroring the pathway the ISSB previously took with the Task Force on Climate-related Financial Disclosures, which handed over climate disclosure monitoring to the ISSB once IFRS S1 and S2 were published.

 

Why New Zealand's Approach Illustrates a Broader Regional Harmonisation Pattern

 

New Zealand's proposal to align its existing climate reporting framework, which predates the ISSB, with IFRS S2 reflects a dynamic playing out in several jurisdictions already operating their own climate disclosure regimes before ISSB standards existed. New Zealand's External Reporting Board found that both companies and investors viewed IFRS S2 and Australia's AASB S2, which is itself based on IFRS S2, as the most significant climate standards during a 2025 consultation, with investors specifically noting they treat Australia and New Zealand as "a single regional investment market" placing value on comparable information across both jurisdictions.

That regional comparability motivation, rather than global standardisation alone, appears to be a specific driver behind New Zealand's proposed alignment, since adopting IFRS S2 would bring the country's framework into closer harmony with its nearest major trading and investment partner specifically. The board nonetheless plans to include "locally relevant modifications" reflecting New Zealand's own legislative and regulatory frameworks, with the resulting standard, tentatively named NZ IFRS S2, not becoming mandatory until 2033, an unusually long transition runway relative to other jurisdictions' adoption timelines.

 

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Why Brazil and South Korea Reveal a Genuine Global Divergence

 

Brazil's June decision to lift mandatory ISSB reporting requirements in favour of a "comply or explain" approach fits a broader pattern the report identifies: the EU has substantially reduced the number of companies subject to sustainability reporting under CSRD, citing administrative burden, while the US has proposed rescinding its federal climate disclosure rules, citing what the SEC described as "overly burdensome and costly" requirements that "exceed the scope of the agency's statutory authority." Brazil's regulator, the CVM, framed its shift as seeking to preserve "the transparency and comparability" of reporting while giving companies flexibility to weigh reporting costs against benefits.

South Korea's trajectory moves in the opposite direction entirely. The country's Financial Services Commission decided to accelerate its previously published ISSB adoption roadmap specifically because of energy price impacts from the Middle East conflict, lowering the asset threshold for companies required to report from 2028 to those with consolidated assets of 10 trillion South Korean won, down from 30 trillion won under the prior roadmap. The FSC stated that "effectively managing climate and energy risks has become an essential policy strategy to ensure sustainable growth for both the country and individual businesses." That contrast, one major economy loosening requirements citing cost burden while another tightens them citing energy security, illustrates that global sustainability reporting policy is not moving in a single consistent direction, but reflects each jurisdiction's own specific economic and geopolitical pressures.

 

Why the ESRS-ISSB Interoperability Push Still Leaves a Core Difference Unresolved

 

The European Commission's July 2026 revised European Sustainability Reporting Standards specifically sought interoperability with global sustainability reporting standards "to the greatest extent possible," including allowing companies to use ISSB industry-based guidance such as SASB standards when developing entity-specific disclosures, and permitting companies to choose between financial control and operational control approaches for emissions reporting boundaries to align more closely with global standards.

Despite that convergence effort, the report notes the fundamental structural difference between the two frameworks remains firmly in place: the ESRS applies a double materiality approach, considering both a company's internal value creation and its external impact on the environment and society, while ISSB standards require disclosure only of sustainability information that could affect a company's current and future financial performance. That distinction, the same double materiality versus single financial materiality divide raised in the US government's formal comments to the EU on CSDDD and CSRD covered elsewhere in recent reporting, means technical interoperability improvements at the disclosure-mechanics level do not resolve the deeper philosophical divergence in what each framework is fundamentally trying to measure.

 

What the Technology Sector Standards Update Reveals About ISSB's Priorities

 

The ISSB is considering amendments to six SASB standards covering the technology and communications sector, driven by what a July staff paper described as the sector's rapid AI deployment, new data governance regulations, and dependence on reliable energy sources and natural resources including water and critical minerals. The paper specifically noted the importance of prioritising this sector from an investor perspective, given that technology accounts for more than one-third of the S&P Global 1200. That prioritisation reflects a broader pattern visible elsewhere in this batch's coverage of AI infrastructure's water and energy demands, suggesting standard-setters increasingly view AI-driven resource consumption as material enough to warrant dedicated disclosure standard updates rather than treating it as adequately covered by existing generic industry guidance.

 

 

Source: S&P Global