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In an unprecedented move for the global hospitality industry, the International Sustainability Standards Board (ISSB) issued its first-ever sustainability standards, known as IFRS S1 and IFRS S2. This marks the start of a new era where transparency on climate risks is not a voluntary act but a compulsory regulation, revolutionizing the approach to sustainability in capital markets.

The game-changing decision, announced yesterday, aims to facilitate the uniform disclosure of climate-related risks and opportunities. As such, it significantly impacts a company’s prospects, fostering greater trust and informed investment decisions. The full details on these standards can be found on the ISSB’s official website.

Swiftly responding to the announcement, the Energy & Environment Alliance (EEA) – an organization dedicated to achieving net zero carbon and promoting ESG (environmental, social and governance) stewardship in the global hospitality industry – acknowledged the moment’s gravity. The EEA emphasized that this mandatory disclosure requirement sets the stage for an era where proactive sustainability action becomes the norm. The EEA’s complete response can be found on their official website.

Ufi Ibrahim, CEO of EEA, voiced her take on the new standards’ implications: “The initial focus on materiality disclosure marks a drastic shift from business as usual, integrating sustainability and ESG considerations into all aspects of business operations.” The newly minted IFRS S1 and S2 will take effect in the 2024 fiscal year, leaving the hospitality industry with limited time for preparation.

The EEA has formed a working group comprising industry leaders and experts to provide guidance and ensure the smooth integration of these new rules. Their mission will include liaising with IFRS and ISSB to develop sector-specific standards. As the hospitality industry grapples with the implications of this move, Ufi Ibrahim urged for unity. “Our industry must provide collective and thoughtful input to the IFRS process,” she said. After all, the consequences of this move would influence every business in the sector and the value of their assets.

With IFRS S1, companies must reveal to investors the sustainability-related risks and opportunities they face in the short, medium, and long term. IFRS S2, on the other hand, prescribes specific climate-related disclosures. Both IFRS S1 and IFRS S2 incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). To know more about these recommendations, visit TCFD’s official website.

This landmark decision indicates an industry-wide shift towards prioritizing sustainability. It’s an electrifying development that underscores the hospitality industry’s growing responsibility towards adopting sustainable practices, laying the foundation for a greener future.