ISSB Around the World: The Comparability Gap

From standard to jurisdiction

An ISSB Standard has no legal force of its own. Binding requirements arise when a jurisdiction incorporates it into law, regulation or listing rules, and the route it takes shapes what investors actually receive.

In our earlier articles we worked through IFRS S1 and IFRS S2 as the ISSB wrote them. Our IFRS 18 Early Adoption Database showed the same lesson from the accounting side: whether a company may apply a new IFRS Accounting Standard, and from when, depends on how its jurisdiction adopts it.

Sustainability reporting adds a second variable. For IFRS Accounting Standards, jurisdictional adoption has largely settled questions of timing and occasional carve-outs. For IFRS S1 and S2, jurisdictions are also deciding which parts become mandatory, which stay voluntary, and how firmly compliance is enforced.

The IFRS Foundation tracks this through jurisdictional profiles. As of September 2026 it reported 22 finalised profiles, 18 of them targeting full adoption of the ISSB Standards (IFRS Foundation). Even within jurisdictions targeting full adoption, scope, timing and transitional arrangements can differ.

London's own decision: the UK moves to comply or explain

The most telling recent case comes from the IFRS Foundation's home jurisdiction. On 30 September 2026 the Financial Conduct Authority published Policy Statement PS26/19, setting the rules for how listed companies report under the UK Sustainability Reporting Standards (UK SRS), the UK-endorsed versions of IFRS S1 and IFRS S2 (Macfarlanes).

The chain runs in three layers: the ISSB issues IFRS S1 and S2, the UK endorses them as UK SRS S1 and S2, and the FCA's Listing Rules decide how listed companies must apply them. PS26/19 changed only the third layer.

What changed. The January 2026 consultation (CP26/5) proposed mandatory UK SRS S2 climate disclosures, with only UK SRS S1 and Scope 3 emissions on a comply-or-explain basis. The final rules apply comply or explain across all disclosures, and extend the same regime to international companies with a secondary listing and depositary receipt issuers (Linklaters). The FCA cited proportionality: climate and sustainability risks affect issuers differently, depending on business model, strategy and risk profile (Pinsent Masons).

What did not change. PS26/19 did not further alter the content of UK SRS, which remains ISSB-based. UK SRS was never identical to IFRS S1 and S2: for example, it makes reference to SASB materials optional rather than required. Comply or explain is also not an exemption. An issuer that falls short of UK SRS S2 must summarise the requirements it has not met, and an issuer reporting in full must make an explicit, unreserved statement of compliance (Baker McKenzie).

Timing. The rules apply to accounting periods beginning on or after 1 January 2027, with first reports in 2028 (Pinsent Masons). Transitional relief runs for one year on Scope 3 emissions and two years on UK SRS S1 (A&O Shearman).

PS26/19 did not further alter the content of UK SRS. It changed the regulatory force with which listed issuers must apply it, and that distinction is the key to reading every other jurisdiction.

Two axes: what the standard says, and how hard it binds

Every jurisdiction's choice can be placed on two independent axes. The first is the basis of the standard: the ISSB text, endorsed with few changes, or a framework of the jurisdiction's own. The second is legal force: mandatory, comply or explain, or voluntary.

The UK sits alone in the middle row: an ISSB-based standard with softened enforcement. New Zealand is the only jurisdiction formally proposing to move across columns.

Jurisdiction by jurisdiction

Six other jurisdictions show how differently the same baseline is being implemented.

Australia: climate first. AASB S2 is mandatory under the Corporations Act, while AASB S1 is voluntary (BDO). To let S2 stand alone, Appendix D carries the IFRS S1 mechanics it needs, such as materiality, fair presentation and comparatives, scoped to climate (ADEC). AASB S2 retains the IFRS S2 measurement hierarchy: the GHG Protocol is the default, but an entity required by Australian law to use another method, such as the NGER methodologies, may use it for the relevant emissions.

Japan: close alignment, phased scope. The SSBJ Standards are being brought into the annual securities report for Prime Market companies. Companies with average market capitalisation of ¥3 trillion or more start with fiscal years ending on or after 31 March 2027, and those between ¥1 trillion and ¥3 trillion a year later .

New Zealand: the early mover pays to realign. New Zealand mandated its own TCFD-based NZ CS before the ISSB Standards existed. The XRB now proposes replacing them with NZ IFRS S2, mandatory from 1 January 2033, with NZ CS still permitted until then (XRB). Two questions remain open: how much of the industry-based guidance to adopt, and whether to prescribe scenarios, where New Zealand currently requires three, Australia two and IFRS S2 none (XBRL International).

Canada: a standard without a mandate. The CSSB issued CSDS 1 and CSDS 2 in December 2024, but in April 2025 the Canadian Securities Administrators paused work on a mandatory rule (ESG News). As of mid-2026 the pause remains in place (OneStopESG).

European Union: a wider framework above the baseline. The ESRS rest on double materiality, covering a company's impacts on people and the environment as well as financial effects on the company. The Omnibus Directive (EU) 2026/470 narrowed CSRD scope to companies with more than 1,000 employees and net turnover above €450 million, with the revised scope applying to financial years beginning on or after 1 January 2027 (Jones Day; Novisto). The simplified ESRS were designed with greater interoperability with global sustainability reporting standards, including ISSB requirements (Watershed).

United States: outside the baseline. The SEC adopted its own climate rule in March 2024, stayed it a month later, and on 29 May 2026 proposed rescinding it entirely as beyond its statutory authority (SEC press release via Newsfile). Climate disclosure continues through other routes, notably California's SB 253 on greenhouse gas emissions (Debevoise).

What the adoption label hides

Each adjustment above has a defensible local rationale. Taken together, they mean that two reports described as ISSB-aligned may not be comparable. The gaps fall into four kinds.

1. Scope. In Australia only the climate standard is mandatory, and in the UK non-climate UK SRS S1 disclosures are deferred by two years. A label that implies the full S1 and S2 package may cover climate alone.

2. Measurement. Australian entities required by law to use NGER methodologies may apply them in place of the GHG Protocol, and scenario analysis ranges from none prescribed to three. The same metric name can rest on different calculations.

3. Legal force. Under comply or explain, a required disclosure may be absent, replaced by an explanation. Comparability then depends on gaps being visible, not on every company disclosing the same items.

4. Timing. Mandatory reporting began in Australia for periods from 2025 and is proposed for 2033 in New Zealand.A comparison of reports published in 2028 may place UK first-time reporters alongside Australian Group 1 companies in their third reporting cycle.

The map also echoes the history of IFRS Accounting Standards, with one reversal. The United States again keeps a foreign standard-setter's output out of its domestic rules. The European Union, the anchor adopter of IFRS Accounting Standards in 2005, this time sits on its own framework, above the ISSB baseline rather than on it.

Conclusion: moving towards the goal, with comparability still open

The ISSB set out to give capital markets a single global baseline, and that baseline is now being written into law. Eighteen jurisdictions target full adoption, and even the UK's shift to comply or explain retained an ISSB-based national standard.

Comparability, the reason for a global baseline, is not yet secured. Scope, measurement, legal force and timing all vary under the same label, and the two largest capital markets outside Asia-Pacific sit apart from it. Whether these differences narrow as regimes mature, or harden into permanent local variants, cannot be answered today.

That makes this a question for continued observation rather than a verdict. We will keep tracking how each jurisdiction implements IFRS S1 and S2, as we have done for IFRS 18 early adoption, and report the changes here as they happen.

Sources

• IFRS Foundation: Adoption of IFRS Sustainability Disclosure Standards, September 2026

• Macfarlanes: UK SRS and the comply or explain approach

• Linklaters: FCA confirms comply or explain approach

• Baker McKenzie: FCA Primary Market Bulletin 66

• XRB: Draft climate reporting roadmap

• SEC: Proposed rescission of climate-related disclosure rules (via Newsfile)

• Jones Day: EU Omnibus Directive

Disclaimer

This article provides general information on IFRS Sustainability Disclosure Standards and their adoption by jurisdictions, based on publicly available information as of October 2026. It does not constitute accounting, legal or regulatory advice. Regulatory requirements may have changed since publication; please refer to the primary sources and consult a qualified professional before making any decision. The views expressed are those of the author and do not represent any organisation with which the author is affiliated.