Tashkent, Uzbekistan (UzDaily.com) – As the world becomes increasingly aware of the environmental, social, and governance implications of business activities, companies are increasingly expected to disclose information about their sustainable development practices and environmental impact reports.

On 26 June 2023, the International Sustainability Standards Board (ISSB) issued two standards that come into effect for annual reporting periods beginning on or after 1 January 2024:

- IFRS S1 "General Requirements for Disclosure of Financial Information on Sustainable Development";
- IFRS S2 "Disclosure of Climate-Related Information".

KPMG Caucasus and Central Asia has released a new review on the implementation of these standards for disclosing sustainable development information, which will help companies assess the risks and opportunities affecting their ability to create long-term value.

In G7 countries, as well as in other European Union countries, disclosure of sustainable development information is already being considered for implementation as a mandatory requirement. Companies intending to operate in these markets or collaborate with companies in these countries must comply with the requirements for providing sustainable development information.

The author of the review, Gulnaz Shakhmukhambetova, Executive Director in the Consulting Services Department at KPMG, explains why IFRS S1 and S2 should be adopted in Central Asian countries as mandatory requirements, and outlines the main aspects of information disclosure in accordance with the new standards:

1. Governance: Companies need to describe the management processes, control mechanisms, and procedures used to monitor risks and opportunities in sustainable development;

2. Strategy: Companies need to describe the strategies employed by the company to manage risks and opportunities related to sustainable development;

3. Risk Management: Companies need to describe the processes used to identify, assess, and manage risks and opportunities in the field of sustainable development.

4. Metrics and Targets: Companies need to describe the company’s performance results regarding risks and opportunities related to sustainable development, including progress towards achieving set goals.

The review also provides recommendations for companies on the application of IFRS S1 and S2 and highlights the challenges that Central Asian countries may face in implementing these standards. Among these are insufficient awareness of companies about the requirements of these standards; the need for investments in terms of time, finances, and resources, as well as investments in the creation and development of processes and systems for data collection and analysis; the need for interaction with stakeholders, including investors, company employees, customers, and suppliers, etc.

KPMG is one of the world’s largest networks of professional firms providing audit, tax, legal, and consulting services. The firm’s offices in 143 countries employ over 270,000 people worldwide. KPMG acts as a responsible organization, continually improving its knowledge and experience, opening up new prospects for cooperation.