Investors used to ask one question about a company: how much profit did it make? Now they also ask how much carbon it emits, how it treats its workers, and what a drought or a new carbon tax would do to its value. Sustainability reporting is how a company answers. The difficulty has been that every company answered in its own way, so the answers could not be compared.
The International Sustainability Standards Board (ISSB), part of the International Financial Reporting Standards (IFRS) Foundation that issues International Financial Reporting Standards (IFRS), was created to fix that.
This topic covers what sustainability means, the three parts of sustainability reporting, the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) frameworks, the Nigerian sustainability rules, the ISSB standards IFRS S1 and IFRS S2, the roadmap set by the Financial Reporting Council of Nigeria (FRC) for adopting them, and how the frameworks compare. The previous topic covered corporate social responsibility.
The next topic covers integrated reporting. November 2025 Questions 6(b) and 7 were about ISSB standards and carried 15 marks.
In 30 seconds
Sustainability means meeting present needs without harming future generations. A sustainability report covers economic, environmental and social performance (the “triple bottom line”). GRI standards focus on a company’s impacts on the economy, environment and people and suit all stakeholders. SASB standards set industry-specific metrics that are likely to matter to investors.
The ISSB, created by the IFRS Foundation, issued IFRS S1 (general sustainability-related financial disclosures) and IFRS S2 (climate) in June 2023. S1 requires disclosure on four areas: governance, strategy, risk management, and metrics and targets, linked to the financial statements. S2 adds climate detail: physical and transition risks, scenario analysis and greenhouse gas emissions (Scopes 1, 2 and 3).
In Nigeria, the FRC roadmap makes the standards mandatory for public interest entities, with earlier voluntary adoption. The ICAN syllabus gives 1 January 2027 for mandatory adopters, and the roadmap as restated in September 2026 gives 1 January 2028 (see the note under the roadmap table). The Securities and Exchange Commission (SEC) and the Nigerian Exchange Group (NGX) have required sustainability reports from listed companies since 2018.
Key terms in plain English
| Term | What it means |
|---|---|
| Sustainability | Meeting today’s needs without damaging the ability of future generations to meet theirs |
| Triple bottom line | Reporting economic (financial), social and environmental results together |
| Materiality | Whether a topic is important enough to include. The lens differs: impact on the world, or effect on the company’s value |
| Greenhouse gas emissions | Gases such as carbon dioxide that cause climate change. Scope 1 is the company’s own emissions, Scope 2 is from the electricity it buys, Scope 3 is everything else in its value chain |
| Physical risk | Harm from climate events, such as floods and heat |
| Transition risk | Harm from the shift to a low-carbon economy, such as carbon pricing |
| Greenwashing | Claiming to be greener than the company really is |
Syllabus check
This topic covers most of Syllabus Area E:
- E1(b), (c), (d) how sustainability is reflected in reports, why demand is growing and the problems and limits of sustainability reporting;
- E2(a), (b), (c) the principles and content of GRI and SASB, the emergence of the ISSB, and the key differences among the IFRS sustainability standards, GRI and SASB;
- E3(a) to (h) the scope and content of IFRS S1 and S2, the FRC roadmap and readiness documents, the ISSB exposure drafts, the usefulness of climate disclosures and preparing a report under S1 and S2.
CAMA 2020 and sustainability reporting
The Companies and Allied Matters Act 2020 (CAMA 2020) does not set sustainability reporting standards. Those come from the FRC, the SEC and the NGX. CAMA 2020 still shapes who is responsible and where the report sits.
| Section | What it says | Link to sustainability reporting |
|---|---|---|
| s. 385 | The directors’ report covers business performance, governance, and risk management and compliance | A sustainability report can be contained in or published alongside it |
| s. 404(7)(a) | The audit committee checks that reporting policies follow legal requirements and agreed ethical practices | It can review sustainability disclosure policies |
| s. 405 | The chief executive officer (CEO) and chief financial officer (CFO) of a company that is not a small company certify that they are responsible for internal controls | The FRC readiness documents require internal control over sustainability reporting |
| s. 407(3) | The auditor has a right of access to books, accounts and vouchers | Assurance on sustainability data relies on access to the underlying records |
Sustainability and why companies report
Sustainability means that organisations and individuals meet their needs today without compromising future generations. Sustainability reporting is an organisation’s practice of reporting publicly on its economic, environmental and social impacts. Companies that damage the environment can lose reputation with customers, suppliers and government, and face fines, civil claims, lost contracts, clean-up costs and falling sales.
| Aspect | What is reported |
|---|---|
| Economic | Value created beyond what the law requires, for example by building human capital |
| Environmental | Impact of products and operations, such as emissions and waste |
| Social | Diversity, child labour, working hours, wages and similar issues |
Interest comes from governments, investors who use social and environmental screens, and companies that see opportunities in efficiency and new products. The number of companies that treat sustainability as a strategic focus has risen because of a better understanding of the link between economic activity and global sustainability, the risk management and economic benefits, and stakeholder demand.
Reporting is largely voluntary, though some countries and stock exchanges have made it compulsory (for example, French law and Swedish state-owned companies using GRI, and the Johannesburg Stock Exchange).
Benefits: better efficiency, higher employee retention, lower cost of capital, stakeholder satisfaction and protection of reputation and share price. Drawbacks: an initial cost, the view that managers should focus only on shareholder return, and allegations of greenwashing. A further problem is comparability: voluntary codes give different content in each report.
The Global Reporting Initiative (GRI)
GRI is an international not-for-profit body whose mission is to make sustainability reporting standard practice. It published its first guidelines in 1999 and now issues the GRI Standards, used by thousands of organisations in over 90 countries. The standards are modular:
- Universal standards (100 series): foundation and reporting principles, general disclosures about the organisation, and the management approach for each material topic.
- Topic standards: 200 series (economic), 300 series (environmental) and 400 series (social).
Reporting principles
| For defining report content | For defining report quality |
|---|---|
| Stakeholder inclusiveness: identify stakeholders and respond to their reasonable expectations | Accuracy: accurate and detailed enough to assess performance |
| Sustainability context: present performance in the wider context of sustainability | Balance: show positive and negative aspects |
| Materiality: cover topics that reflect significant economic, environmental and social impacts, or influence stakeholders’ decisions | Clarity: understandable and accessible |
| Completeness: cover material topics and their boundaries | Comparability: consistent over time and with other organisations |
| Reliability: prepared so it can be examined | |
| Timeliness: reported on a regular schedule |
A company may report “in accordance with” the GRI Standards at the core level (the minimum needed to understand the organisation, its material topics, impacts and management) or the comprehensive level (adding strategy, ethics and governance and all topic-specific disclosures). It may also make a “GRI-referenced” claim, using selected standards for specific impacts.
The Sustainability Accounting Standards Board (SASB)
SASB is an independent non-profit body that published industry-specific sustainability accounting standards for disclosure in filings with the United States Securities and Exchange Commission. Each standard has disclosure guidance on sustainability topics that may be material to companies in that industry, and accounting metrics. Each company decides which topics are material to it. Activity metrics give standardised measures so that disclosure is useful, comparable and auditable.
For oil and gas exploration and production, the topics include greenhouse gas emissions, air quality, water management, biodiversity, security and human rights, community relations, health, safety and emergency management, business ethics, reserves valuation and regulatory management. The water management metrics include fresh water withdrawn and recycled, produced water volumes and disclosure of hydraulic fracturing chemicals.
Other bodies
- The Sustainable Stock Exchanges initiative encourages exchanges to work with investors, regulators and companies to improve transparency on environmental, social and governance (ESG) issues. The Nigerian Exchange Group is a partner.
- The Institute of Social and Ethical Accountability developed the AA1000 series of principles-based accountability standards.
Sustainability in Nigeria
- 2018 guidelines. The SEC and the NGX issued sustainability disclosure guidelines requiring every listed company to report on its social and environmental activities in the annual report or a separate report, issued at the same time as the annual report. The nine principles cover governance (ethics, responsible policy influence, safe products, responsible customer engagement), social (employee wellbeing, vulnerable stakeholders, human rights, inclusive growth) and environment (respect, protect and restore). Indicators cover supplier selection, workplace diversity and safety, human rights, anti-corruption, waste, water and energy use and compliance with environmental laws.
- Nigerian Code of Corporate Governance 2018. Principle 26 deals with sustainability. The board sets policies on social, ethical, safety, working conditions, health and environmental responsibilities and anti-corruption, monitors them and reports on compliance.
- Nigerian Sustainable Banking Principles. Nine principles for banks cover environmental and social risk management, operations, human rights, women’s role in the economy, financial inclusion, governance, capacity building, partnerships and reporting.
The ISSB and IFRS S1 and S2
Why the ISSB emerged
Before the ISSB, sustainability reporting was fragmented across frameworks such as SASB, the Task Force on Climate-related Financial Disclosures, GRI, the Climate Disclosure Standards Board and the Integrated Reporting Framework. This produced inconsistent, incomparable and sometimes unreliable data. Investors needed decision-useful and comparable information on risks such as climate change and supply chain disruption.
The International Organization of Securities Commissions, the Group of Twenty and others called for a global baseline, and the IFRS Foundation launched the ISSB at the COP26 climate conference. The ISSB sits alongside the International Accounting Standards Board and brought in the Climate Disclosure Standards Board and the Value Reporting Foundation, which carried the Integrated Reporting Framework and SASB standards.
IFRS S1: general requirements
On 26 June 2023 the ISSB issued IFRS S1 and IFRS S2, effective for periods beginning on or after 1 January 2024. IFRS S1 requires disclosure of material information about sustainability-related risks and opportunities that could reasonably be expected to affect the company’s prospects. It:
- requires the information to be reported together with the financial statements, for investors;
- sets out four core content areas: governance, strategy, risk management, and metrics and targets;
- requires industry-specific disclosures and points to the SASB standards for guidance;
- refers to sources for identifying risks and opportunities beyond the scope of S2; and
- requires connectivity: users must be able to see the links between sustainability-related risks and opportunities and the financial statements.
On materiality: IFRS S1 asks what could affect the company’s prospects and value, so its lens is the effect on the company (sometimes called financial or enterprise value materiality). GRI asks about the company’s impact on the world. “Double materiality” combines both. The syllabus refers to double materiality methodology, so be able to explain the three lenses and say which each framework uses.
IFRS S2: climate-related disclosures
- Strategy disclosures distinguish physical and transition risks.
- The company discloses its plans to respond, including how climate targets are set and any legal targets.
- It performs climate scenario analysis and resilience testing to explain how climate events may affect the business.
- Metrics cover greenhouse gas emissions (Scopes 1, 2 and 3), industry-based metrics and company-specific metrics.
- Transition planning and climate commitments are disclosed.
The FRC Nigeria roadmap
| Adopter group | Timing, as in the ICAN syllabus |
|---|---|
| Early adopters | Periods ending on or before 31 December 2023 |
| Voluntary adopters | Periods ending on or before 31 December 2026 |
| Mandatory adopters | Periods beginning on or after 1 January 2027 |
| Public sector entities | To be communicated later |
Note: the table above follows the ICAN syllabus. The Securities and Exchange Commission circular of 23 September 2026 restates the FRC roadmap as follows: voluntary adoption for periods beginning on or after 1 January 2024 up to periods ending on or before 31 December 2027, and mandatory adoption for public interest entities (all public companies and significant public interest capital market operators) for periods beginning on or after 1 January 2028, with small and medium-sized entities from 1 January 2030.
The circular also required these entities to send an implementation plan to the Commission by 15 October 2026. So the current roadmap is slightly different from the ICAN syllabus. In the exam, use the dates in the question. If none are given, state the ICAN dates and add that the roadmap has since been amended.
Entities adopting must send documents to the FRC for a readiness assessment:
- at least three months before the reporting period begins, a board resolution approving adoption, a gap analysis report and an implementation plan
- within three months after the start, sustainability disclosure policies, identification of transitional reliefs, an enterprise risk management and sustainability framework, evidence of board approval and training
- within six months after the start, evidence of registration with the FRC, scenario analysis models, identified risks and opportunities, governance structure, targets and metrics, the financial reports that need updating, the effects on the business model and value chain, and internal control over sustainability reporting
ISSB exposure drafts
The ISSB has issued exposure drafts on nature-related disclosures (biodiversity, ecosystems and ecosystem services), updates to IFRS S2 on greenhouse gas emissions and climate resilience, and alignment of the SASB standards with the ISSB standards for priority industries, including oil and gas.
For an oil and gas company this means stronger disclosure of emissions, methane leakage and flaring, closer linkage to S2’s physical and transition risks, more granular operating data and higher assurance expectations. Steps: a gap assessment against the drafts, better emissions measurement, board oversight of climate risk, scenario analysis, systems and skills for sustainability data, and stakeholder engagement.
Comparing the frameworks
| Feature | GRI | SASB | ISSB (IFRS S1 and S2) |
|---|---|---|---|
| Main audience | All stakeholders | Investors | Investors and capital providers |
| Materiality lens | The company’s impact on the world | Effect on company value, by industry | Effect on company prospects and value |
| Structure | Universal and topic standards | Industry-specific standards and metrics | General requirements (S1) and climate (S2) |
| Link to financial reporting | Loose | Filing-oriented | Connected to the statements, published together |
The rules in more depth
Why comparability was the main problem
Two companies could report “water use” in different units, for different periods and with different boundaries. The ISSB aims to give a single baseline that regulators can adopt, so that investors compare like with like.
Why connectivity matters
A climate risk is only useful to an investor if the numbers show it. If a company says it faces carbon pricing, the reader wants to see the effect on asset values, provisions and cash flow in the statements. S1 requires the report to draw these links.
Greenwashing and assurance
A claim that cannot be checked invites suspicion. That is why sustainability data needs controls, evidence and, increasingly, external assurance, which was covered in the audit course.
Practical steps to prepare
Understand the current position by gap analysis; build a roadmap with owners and timelines; collect good quality data with controls; learn the standards; and train the board and staff.
Worked example: counting Scope 1 and Scope 2 emissions
Scenario. Aqua Fresh Plc burned 200,000 litres of diesel in its own generators and trucks in 2027 and bought 1,500,000 kilowatt-hours (kWh) of grid electricity. Assume an emission factor of 2.7 kilograms of carbon dioxide equivalent (kgCO2e) per litre of diesel and 0.4 kgCO2e per kWh of electricity. These factors are illustrative only. In practice, use factors from a recognised source. Calculate Scope 1 and Scope 2 emissions.
- Scope 1.
(the company’s own fuel): 200,000 × 2.7 = 540,000 kgCO2e = 540 tonnes. - Scope 2.
(purchased electricity): 1,500,000 × 0.4 = 600,000 kgCO2e = 600 tonnes. - Total Scopes 1 and 2:
540 + 600 = 1,140 tonnes. - Scope 3 would add emissions in the value chain, such as suppliers’ production, transport by others and use of products. It is harder to measure and is often the largest share.
- Reporting. Under IFRS S2 the company would disclose the totals by scope as cross-industry metrics, with the methods and factors, the targets set, and how climate risks affect strategy and the statements. In Nigeria, this would fall within the FRC roadmap if the company is a mandatory adopter (1 January 2027 on the ICAN syllabus, 1 January 2028 under the current roadmap), with controls over the data (s. 405 of CAMA 2020).
How to score full marks
- For the emergence of the ISSB, give the fragmentation, investor demand, the call from regulators, and the two standards it issued.
- For a benefits and challenges report, follow a report format: introduction, benefits, challenges, recommendations, conclusion. Use the case facts.
- For S1, name the four content areas, connectivity and the investor focus. For S2, name physical and transition risks, scenario analysis and the three scopes.
- For comparison questions, use audience and materiality lens as the two anchors.
- For oil and gas or other industries, link the industry’s material topics (emissions, water, safety) to the draft changes.
- Quote the dates: 26 June 2023 issue date, 1 January 2024 effective date, 1 January 2027 mandatory adoption on the ICAN syllabus (the current FRC roadmap says 1 January 2028).
Common mistakes in the exam
- Saying GRI and the ISSB have the same materiality lens.
- Calling SASB a general standard. It is industry-specific.
- Listing S1 and S2 as identical. S1 is general, S2 is climate-specific.
- Forgetting connectivity with the financial statements.
- Mixing up Scope 2 (purchased energy) and Scope 3 (value chain).
- Saying Nigerian sustainability reporting is only voluntary, when the SEC and NGX guidelines already require it for listed companies.
- Giving only benefits of ISSB adoption without challenges such as cost, data and skills.
Quick revision
- Sustainability: meet present needs without harming future generations. Triple bottom line: economic, environmental, social.
- GRI: all stakeholders, impacts, universal and topic standards, ten principles, core and comprehensive.
- SASB: industry-specific, investor-focused, activity metrics.
- Nigeria: SEC and NGX guidelines (2018), Code principle 26, Sustainable Banking Principles.
- IFRS S1: governance, strategy, risk management, metrics and targets, connectivity. IFRS S2: physical and transition risks, scenario analysis, Scopes 1, 2 and 3.
- FRC roadmap: early, voluntary, mandatory from 1 January 2027 on the ICAN syllabus (1 January 2028 under the current roadmap), public sector later.
- CAMA 2020: ss. 385, 404(7)(a), 405, 407(3).
Practice questions
These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer. Full model answers follow the written questions.
Recall check: multiple choice
The real ICAN paper has no multiple-choice section. These questions are for quick recall. The written questions that follow are closer to the exam.
Question 1. The triple bottom line refers to:
- Financial, social and environmental performance
- Tax, audit and law
- Revenue, cost and profit only
- Governance, compliance and risk
Show the answer
A. Sustainability reports are often called triple bottom line reports.
Question 2. The GRI Standards mainly focus on:
- Investors only
- The company’s impacts on the economy, environment and people, for all stakeholders
- Tax authorities
- Auditors
Show the answer
B. The materiality lens is impact on the world.
Question 3. SASB standards are:
- Industry-specific
- Identical for every industry
- Only for banks
- Only for the public sector
Show the answer
A. Each company decides which topics are material.
Question 4. IFRS S1 and S2 were issued by the ISSB in:
- June 2023
- June 2013
- January 2020
- December 2026
Show the answer
A. They became effective for periods beginning on or after 1 January 2024.
Question 5. Which of the following is NOT one of the four core content areas of IFRS S1?
- Governance
- Strategy
- Dividend policy
- Metrics and targets
Show the answer
C. The fourth is risk management.
Question 6. IFRS S2 deals with:
- Revenue
- Climate-related disclosures
- Leases
- Segments
Show the answer
B. It includes scenario analysis and emissions metrics.
Question 7. Scope 2 emissions arise from:
- The company’s own fuel use
- Purchased electricity
- The value chain
- Employee commuting only
Show the answer
B. Scope 1 is own fuel and Scope 3 is the value chain.
Question 8. Under the ICAN syllabus roadmap, mandatory adopters apply IFRS S1 and S2 for periods beginning on or after:
- 1 January 2024
- 1 January 2025
- 1 January 2027
- 1 January 2030
Show the answer
C. Voluntary adopters had periods ending on or before 31 December 2026.
Question 9. In sustainability reporting, greenwashing means:
- Reporting on time
- Claiming to be greener than the company really is
- Planting trees
- Auditing carbon data
Show the answer
B. It damages credibility.
Question 10. Which section of CAMA 2020 requires the CEO and CFO of a company that is not a small company to certify responsibility for internal controls?
- Section 405
- Section 394
- Section 402
- Section 409
Show the answer
A. The FRC readiness documents include internal control over sustainability reporting.
Written questions
Question 11 (10 marks). (a) Explain sustainability and the three aspects of sustainability reporting. (4 marks) (b) State three advantages of sustainability reporting. (3 marks) (c) State three disadvantages or problems of sustainability reporting. (3 marks)
Question 12 (20 marks). (a) State six of the GRI reporting principles. (6 marks) (b) Explain the nature and structure of the SASB standards. (4 marks) (c) Explain the core content of IFRS S1 and the main requirements of IFRS S2. (6 marks) (d) Compare GRI, SASB and the ISSB standards by audience and materiality lens. (4 marks)
Question 13 (10 marks). Kano Oil Plc, a multinational group, is considering adopting the ISSB standards. Prepare a short report to management. (a) Explain the emergence of the ISSB. (3 marks) (b) Discuss two benefits and two challenges of adoption. (4 marks) (c) Recommend three steps the company should take, with the FRC roadmap in mind. (3 marks)
Model answers
Show the model answer to Question 11
(a) Sustainability (4 marks). Sustainability means meeting present needs without compromising the needs of future generations. (1) Economic: value created beyond what the law requires. (1) Environmental: effects of products and operations, such as emissions and waste. (1) Social: matters such as diversity, child labour, hours and wages. (1)
(b) Advantages (3 marks, any three at 1). Employee satisfaction improves customer service. Stakeholder satisfaction improves financial performance. Investors prefer sustainable practices. Reputation and share price are protected. Efficient use of resources saves money. Lower cost of capital.
(c) Disadvantages and problems (3 marks, any three at 1). Focus may be diverted from shareholder return. Initial costs of becoming green. Greenwashing allegations may damage reputation. Voluntary codes make reports hard to compare.
Show the model answer to Question 12
(a) GRI principles (6 marks, any six at 1). Stakeholder inclusiveness. Sustainability context. Materiality. Completeness. Accuracy. Balance. Clarity. Comparability. Reliability. Timeliness.
(b) SASB (4 marks). SASB is an independent non-profit that publishes industry-specific sustainability accounting standards. (1.5) Each standard has disclosure guidance on topics likely to be material in the industry and standard accounting and activity metrics. (1.5) Each company decides which topics are material to it. (1)
(c) IFRS S1 and S2 (6 marks). S1: disclose material information on sustainability-related risks and opportunities that could affect prospects. (1) Four content areas: governance, strategy, risk management, and metrics and targets. (1) Connectivity with the financial statements. (1) S2: physical and transition risks. (1) Climate scenario analysis and resilience. (1) Metrics including Scope 1, 2 and 3 emissions, and targets. (1)
(d) Comparison (4 marks). GRI serves all stakeholders and looks at the company’s impacts on the world. (1.5) SASB serves investors, with industry-specific metrics focused on effect on company value. (1.5) The ISSB standards serve capital providers, look at effect on prospects and value, and connect to the financial statements. (1)
Show the model answer to Question 13
(a) Emergence (3 marks). Reporting was fragmented across many frameworks, giving inconsistent and incomparable data. (1) Investors and regulators such as the International Organization of Securities Commissions and the Group of Twenty asked for a global baseline. (1) The IFRS Foundation set up the ISSB, which issued IFRS S1 and S2. (1)
(b) Benefits and challenges (4 marks). Benefits: greater transparency and credibility; better access to capital and lower cost of capital; better climate risk management. (any two, 1 each) Challenges: cost of systems, assurance and training; difficulty collecting reliable data across subsidiaries; skills gaps; higher scrutiny and compliance risk. (any two, 1 each)
(c) Steps (3 marks). Do a gap analysis against the standards. (1) Set a roadmap and implementation plan, with board approval, and submit the readiness documents to the FRC on time. (1) Build data systems and controls and train staff and the board. (1)
Pathfinder on sustainability reporting and the ISSB
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
The marking guide gives 1 mark each for an introduction, benefits, challenges, recommendations and a conclusion, in report format. The suggested solution names IFRS S1 and S2 and lists benefits such as transparency, access to capital, risk management and competitive advantage, and challenges such as cost, data collection, transition workload, skills gaps and scrutiny. The ISSB section and practice question 13 follow that pattern.
Revise first: The ISSB and IFRS S1 and S2
Part (a) asks for the implications of the exposure drafts for nine priority industries and the steps to take: 2.5 marks each. Part (c) asks you to discuss why the ISSB emerged. Examiners said that candidates lacked knowledge of ISSB activities. Learn the exposure drafts paragraph and the emergence paragraph.
Revise first: The ISSB and IFRS S1 and S2
No past question in the two diets asks about the roadmap, but the syllabus lists it, so expect questions on the adopter groups and their dates. The table in the ISSB section sets them out.
Revise first: The ISSB and IFRS S1 and S2
Source: ICAN Pathfinder, Strategic Business Reporting. Diets covered: November Diet, 2025 and May Diet, 2026.
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