The International Sustainability Standards Board (ISSB) recently launched a consultation on general sustainability-related disclosure requirements and climate-related disclosure requirements, for two of its first proposed standards.
These standards are part of ISSB’s purpose, which is to deliver sustainability-related disclosure standards with a comprehensive global baseline, aiming to provide sustainability-related risks and opportunities related to certain companies for investors and other capital market participants.
The ISSB was established on November 2 last year at COP26. It was formed by the IFRS Foundation Trustees to meet demand for high quality, transparent, reliable and comparable reporting by companies on climate and ESG matters from international investors with global investment portfolios.
Its proposals will be presented in two live webinars on 28 April at 9 am and 5 pm BST. The proposals, developed in response to requests from G20 leaders, the International Organisation of Securities Commissions (IOSCO) and others, are open for feedback over a 120-day consultation period closing on 29 July 2022.
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The proposals for sustainability disclosures
The exposure drafts, or proposals, were built on recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD). These proposals also incorporated industry-based disclosure requirements derived from SASB Standards. The ISSB also collaborates with other international organisations and jurisdictions to ensure that these upcoming standards are to be included in jurisdictional requirements.
“Rarely do governments, policymakers and the private sector align behind a common cause. However, all agree on the importance of high-quality, globally comparable sustainability information for the capital markets,” says Emmanuel Faber, Chair of the ISSB. “These proposals define what information to disclose, and where and how to disclose it. Now is the time to get involved and comment on the proposals.”
“IOSCO welcomes the publication of the ISSB’s two proposed IFRS Sustainability Disclosure Standards. We will review the proposals, with the objective to endorse them for use by our member jurisdictions,” said Ashley Alder, Chairman of the IOSCO Board.
“Endorsement by IOSCO can pave the way for adoption of the Standards around the world, delivering much-needed consistency and comparability in sustainability-related information to the capital markets.”
The ISSB will review the incoming feedback on the proposals in the second half of 2022. The new standards are set to be issued by the end of the year, subject to this feedback.
Read more about the reporting standards these proposals will be based on here.
Setting sustainability standards for global industries based on TCFD and SASB
The proposals also come with a snapshot that provides a high-level summary of the requirements, a document that compares TCFD’s recommendations with Exposure Draft Climate-related Disclosures, and a document that compares the Technical Readiness Working Group’s recommendations with the exposure drafts.
Technical Readiness Working Group (TRWG), established by the IFRS Foundation Trustees in March 2021, provided the prototypes that the proposals were built upon. These ISSB’s proposals were also developed based on the collaborative work of the Climate Disclosure Standards Board, the International Accounting Standards Board, the Value Reporting Foundation (including Integrated Reporting and SASB Standards), the TCFD, and the World Economic Forum.
“By building on the TCFD's framework, the ISSB's climate proposals will create further consistency, comparability and reliability across climate disclosure so investors can make more informed financial decisions,” said Mary Schapiro, Head of the TCFD Secretariat.
Later this year, the ISSB will also open the consultation on its standard-setting priorities, seeking feedback on the sustainability-related information needs of investors. It will focus on assessing enterprise value and on the further development of industry-based requirements, building on SASB Standards, as well as a broad range of other sustainability matters.
At the end of March, the ISSB announced it has set out a plan for how its work will build on the SASB Standards and industry-based standard-setting processes. On top of these, initial proposals for an IFRS Sustainability Disclosure Taxonomy are to be published shortly. These proposals are expected to enable structured electronic tagging of a company’s sustainability disclosures.