Banks Struggle to Implement ISSB Sustainability Reporting Rules

Why It Matters

The gap between regulatory ambition and banks’ operational readiness threatens compliance costs, reputational risk, and the reliability of climate‑risk pricing for investors.

Key Takeaways

• 22 of 24 banks consider IFRS S1; 23 consider IFRS S2
• Only 13% have sufficient staff and skills for ISSB
• 30% still rely on spreadsheets for emissions calculations
• 48% flag inadequate counterparty data as top challenge
• No institution reports fully adequate technology for ISSB implementation

Pulse Analysis

The International Sustainability Standards Board (ISSB) has become the de‑facto global baseline for climate and sustainability disclosures, prompting banks worldwide to align their reporting with IFRS S1 and IFRS S2. While the regulatory momentum is clear, the survey reveals that most financial institutions are still in the early stages of building the data architecture and governance frameworks required for rigorous, investor‑grade reporting. This transition mirrors the shift from voluntary ESG narratives to mandatory, financially material disclosures that sit alongside traditional financial statements.

Operational challenges dominate the landscape. Over a third of respondents still calculate emissions using spreadsheets, and nearly half cite insufficient counter‑party data as a major obstacle. The lack of standardized measurement methodologies forces banks to develop bespoke models, stretching limited internal expertise—only 13% feel they have enough skilled staff. Consequently, technology investments lag; no bank reports having a fully adequate system to support ISSB reporting, highlighting a critical execution gap that could delay compliance timelines.

For investors and regulators, the stakes are high. Consistent, comparable sustainability data will soon influence credit ratings, equity valuations, and capital allocation decisions across the financial sector. As banks close the data and skill gaps, they will unlock more transparent climate‑risk assessments, enabling better pricing of transition risks. In the interim, fragmented reporting may generate reputational and regulatory risks, prompting institutions to accelerate technology upgrades, standard‑setting collaborations, and cross‑functional governance to meet the emerging ISSB expectations.