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Making Sense of CSRD and ISSB: What Businesses Need to Know About Interoperability

Published on 21/10/2025 by Acclaro Advisory

Sustainability reporting has moved from a voluntary exercise to a regulatory expectation. Across markets, policymakers and investors are asking for more structured, comparable, and decision-useful information on how businesses manage sustainability risks and opportunities.

Two major frameworks now define this space.

The Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) set a comprehensive and mandatory reporting regime for companies operating in or with significant activities in the EU.
The International Sustainability Standards Board (ISSB), through its IFRS S1 and S2 standards, provides a global baseline for sustainability disclosures that focus on financial materiality and investor relevance.

Both frameworks aim to improve the credibility and consistency of sustainability information, but they differ in scope and intent. The CSRD looks at both a company’s impact on people and the planet and the financial effects of sustainability issues. The ISSB focuses on how these factors affect enterprise value.

Many large or multinational companies are subject to both frameworks. Understanding how the CSRD and ISSB align is increasingly important to avoid duplication, streamline reporting, and build a coherent sustainability narrative across jurisdictions.

As well as understanding the ISSB framework, it’s important to understand implementation into local jurisdictions that apply to your organisation.

The two frameworks in context

CSRD/ESRS

The CSRD represents the most extensive regulatory framework for sustainability reporting to date. It applies to:

Large EU companies and listed entities.
Non-EU companies with substantial operations or subsidiaries in the EU.

At the heart of CSRD is the principle of double materiality. Companies must assess both how sustainability issues affect their business and how their activities impact society and the environment.

Reporting is delivered through disclosure requirements across environmental, social, and governance topics. The sustainability statement must form part of the managementreport, placing it alongside financial reporting and subjecting it to assurance.

The CSRD’s purpose is to provide transparency for a broad range of stakeholders, not only investors, but also regulators, employees, customers, and civil society. It positions sustainability information as equally important as financial information in understanding a company’s performance and resilience.

ISSB / IFRS S1 and S2

The ISSB was established by the IFRS Foundation to create a global baseline of sustainability-related financial disclosures. It builds on the work of existing frameworks such as TCFD, SASB, and the Integrated Reporting Framework.

The ISSB standards focus solely on financial materiality, how sustainability risks and opportunities influence enterprise value.

IFRS S1 sets general disclosure requirements for sustainability risks and opportunities across all topics.
IFRS S2 focuses specifically on climate-related disclosures, closely following the TCFD structure of governance, strategy, risk management, and metrics and targets.

ISSB disclosures can be included within an organisation’s general financial reporting. The intent is to provide investors and capital markets with consistent, comparable, and decision-useful information to inform financial decisions.

While the CSRD takes a broader stakeholder view, ISSB offers a practical and financially focused framework for companies operating in multiple jurisdictions.

Why interoperability matters

For many companies, compliance will not be a choice between CSRD or ISSB, but a requirement to meet both. A European subsidiary of a global company may fall under CSRD, while the group must also meet ISSB expectations for investor reporting.

Without coordination, this could create parallel systems, inconsistent data, and reporting fatigue. Interoperability provides a practical solution.

Aligning the two frameworks enables organisations to:

Reduce duplication by using common data, governance structures, and reporting cycles.
Maintain consistency in sustainability and financial disclosures across different jurisdictions.
Strengthen credibility by ensuring that both regulatory and investor expectations are met through a single reporting process.
Improve efficiency in data collection, assurance, and internal controls.

In July 2024, the IFRS Foundation and EFRAG published joint interoperability guidance that clarifies how companies can use one set of disclosures to satisfy both frameworks. The guidance highlights strong alignment on general requirements and greenhouse gas emissions, and outlines where additional disclosures are necessary to meet both standards.

Understanding this interoperability is not just about compliance. It is about building a reporting system that can serve multiple requirements efficiently and support long-term strategic decision making.

Where the frameworks align

Both the ISSB and CSRD are built around the same core structure originally developed by the Task Force on Climate-related Financial Disclosures (TCFD). This structure helps organisations explain not only what they report, but how sustainability considerations are integrated into decision making and performance.

The four pillars are:

Governance – how oversight of sustainability and climate issues is structured at board and management level.
Strategy – how material sustainability risks and opportunities influence the organisation’s business model, value chain, and long-term plans.
Risk Management – how these risks and opportunities are identified, assessed, and managed within the broader enterprise risk framework.
Metrics and Targets – how performance is measured and tracked, including greenhouse gas emissions, energy use, and progress against reduction targets.

The July 2024 interoperability guidance confirms that these pillars are highly aligned between ISSB and CSRD, even where their materiality lenses differ.

Materiality

Both frameworks apply financial materiality, requiring disclosure of sustainability matters that could affect enterprise value.

The CSRD goes further by introducing impact materiality, which covers significant impacts on people and the environment even where there is no immediate financial effect.

The ISSB focuses only on financial materiality, consistent with investor-oriented reporting.

Governance

Requirements are largely consistent. Both frameworks expect clear disclosure of:
- Board and management responsibilities for sustainability and climate matters.
- How sustainability oversight is integrated into governance structures and control systems.
ESRS is slightly more structured, setting out defined disclosure points within ESRS 2.
ISSB is more principle-based but allows flexibility in how information is presented.
In practice, the same governance disclosures will meet both frameworks with minimal adjustment.

Strategy

Both frameworks require an explanation of how sustainability risks and opportunities affect the organisation’s business model, financial planning, and strategic decision making.
ISSB focuses on financial materiality and the implications for enterprise value. It draws on SASB sector guidance to ensure relevance by industry.
CSRD broadens this view to include the organisation’s impacts on people and the environment. It also requires disclosure of how strategy aligns with climate and sustainability goals, such as net zero or Paris Agreement alignment.
Both frameworks expect companies to discuss climate resilience and use scenario analysis to understand potential future outcomes.

Risk management

The two standards are compatible but differ slightly in emphasis.
Both require an explanation of processes for identifying, assessing, and managing sustainability risks.
ESRS goes further by asking for disclosure of risks before mitigation and by encouraging quantification of both physical and transition risks.
ISSB focuses on integration with enterprise risk management and prioritisation of financially material issues.
A unified risk framework can meet both requirements with adjustments to how data and assumptions are presented.

Metrics & targets

Both frameworks use metrics and targets to link strategy and governance to measurable performance.
ISSB adds more detail on data verification, the assumptions behind metrics, and the financial effects of climate risks and opportunities. It also expects additional sector-specific disclosures, particularly for financial institutions’ Scope 3 emissions.
CSRD expands the scope to cover wider environmental and social performance indicators, such as energy use, pollution, and workforce data. It requires clear disclosure of absolute GHG reduction targets, use of carbon credits, and how sustainability targets are integrated into incentives and remuneration.
A combined reporting system can capture both sets of requirements by establishing a robust data foundation and tagging metrics to the relevant standard.

Scenario analysis & climate resilience

Both frameworks expect companies to use scenario analysis to test the resilience of their strategy under different climate pathways.
ISSB places greater emphasis on disclosure of assumptions, data sources and alignment with the organisation’s strategic and financial planning cycles.
CSRD requires disclosure of whether the scenarios used are Paris-aligned, and how the outcomes inform strategic choices, transition planning and the assessment of resilience.
In practice, companies can use a common set of scenarios and time horizons, expanding disclosures where necessary to meet the more detailed ISSB expectations on methodology and the CSRD expectations on policy alignment.

Area	CSRD / ESRS	ISSB / IFRS S1–S2	What it Means for Business
Materiality	Double materiality (impact and financial)	Financial only	Extend assessments to include environmental and social impacts.
Presentation	Reported within the management report as a sustainability statement	Disclosed within general financial reporting	Align structure and timing across financial and sustainability teams.
Sector Guidance	Optional, entity-specific	Requires SASB sector references	Map SASB topics to ESRS material topics early.
Disclosure of Assumptions	Limited requirements	Detailed on methodologies, assumptions and data verification	Document modelling assumptions and provide clear rationale.
Carbon Credits	Stricter disclosure and credibility rules	Greater flexibility	Apply ESRS criteria to ensure compatibility.
Assurance	Mandatory limited assurance (moving to reasonable)	Not prescribed	Build assurance processes to meet EU expectations.

Practical steps for dual reporters

Map existing disclosures across ESRS and ISSB to identify overlaps and incremental requirements.
Start with ESRS as the baseline, then supplement with the few additional ISSB disclosures (for example, data verification and sector references).
If beginning from ISSB, expand to include:
- Impact materiality.
- Wider environmental and social disclosures.
- Quantified transition and physical risks.
- Detailed carbon credit and net-zero target information.
Align governance, finance, and sustainability teams early to ensure data consistency and integration into financial planning cycles.
Engage assurance providers to confirm that interoperability is maintained in audit processes and evidence chains.
For ISSB ensure alignment with local jurisdiction implementations.

The takeaway: integration over duplication

ISSB and CSRD are closely aligned on structure and intent, even if their audiences and scopes differ.
Businesses that design their systems with interoperability in mind can:
- Simplify reporting.
- Strengthen governance and investor confidence.
- Reduce costs and risk of inconsistent disclosures.
The direction of travel is towards one integrated reporting system that serves multiple requirements efficiently.