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by
AnhNguyen
- July 15, 2024
During London Climate Action Week, at the IFRS Foundation Conference [1], ISSB Chairman Emmanuel Faber disclosed plans to further unify the landscape of sustainability reporting. This comes as the International Sustainability Standards Board (ISSB) begins a new two-year work plan and releases the Feedback Statement [2] on its work plan.
These developments mark a significant step towards creating a cohesive and comprehensive framework for global sustainability reporting. As the ISSB sets its sights on its inclusive new work plan, several pivotal initiatives and standards are poised to reshape the reporting landscape.
Fully compatible with the Global Reporting Initiative (GRI)
In a notable development from May 2024, the IFRS Foundation and GRI have made a significant announcement concerning their intent to work together [3]. Their respective bodies, the ISSB and GRI’s Global Sustainability Standards Board (GSSB), will come together to pinpoint and align shared disclosures that cater to the unique scopes and objectives of each of their guidelines covering both thematic and sector-specific standards.
This partnership is geared towards creating a unified, global, and thorough sustainability reporting framework for corporations. This initiative will bridge the informational requirements of not only the investment community but also a wider group of stakeholders. This move showcases a stride towards seamless business transparency and accountability in the world of sustainability.
Transition Plan Taskforce Disclosure Framework
As part of the global movement towards a greener economy, many corporations have implemented transition plans, leading to an increase in corporate climate-related disclosures. To facilitate this process and minimize information fragmentation, the ISSB is streamlining its approach to disclosure requirements. This will be in line with the ongoing implementation of IFRS S1 and S2, aiming to provide high-quality, decisive information about companies’ plans, rather than an obligation for transitional planning.
The IFRS Foundation will oversee the disclosure-specific materials developed by the Transition Plan Taskforce, with these materials hosted on the IFRS Sustainability Knowledge Hub. The objective is to create educational content without altering the requirements of IFRS S2, tailoring the resources for a global audience and aligning with IFRS S2’s focus on climate-related disclosures. In the future, the ISSB plans to enhance the IFRS S2 application guidance, utilizing these materials to provide comprehensive disclosures that cater to investors’ information needs.
GHG Protocol Agreement
The GHG Protocol has recently joined forces with the IFRS Foundation and ISSB, to boost compatibility and meet the demands of the capital markets. An agreement, formalized through a Memorandum of Understanding, has set forth governance structures ensuring active engagement of ISSB in updates and decisions regarding GHG Protocol standards and guidance. This collaboration also sees the inclusion of an ISSB representative within the GHG Protocol Independent Standards Board.
GHG Protocol Independent Standards Board Chair Professor Alexander Bassen commented: “This coordination between the IFRS Foundation and GHG Protocol is a momentous step in standardising GHG reporting globally. The deepening of the collaboration between the two parties will be a great benefit to companies seeking to measure, manage and report on their GHG emissions, and close collaboration with the IFRS Foundation will be invaluable to GHG Protocol’s standards update process for the suite of corporate standards.“
Taskforce on Nature-related Financial Disclosures
In the Feedback Statement published by the ISSB, there is a clear focus on how to enhance information available to investors. The ISSB is taking a deeper dive into research concerning biodiversity, ecosystems, and ecosystem services.
In this journey, the ISSB has announced its intention to draw on relevant established initiatives to meet investors’ needs for reliable information. The objective is to create a foundation that will benefit stakeholders now and in the future.
Further, the ISSB has also committed to incorporate the suggestions of the Taskforce on Nature-related Financial Disclosures (TNFD) into their research. This decision follows the Taskforce’s recommendations released in September 2023, which will serve as useful benchmarks on this important mission.
Partnering with CDP
The Climate Disclosure Project (CDP) stands as the principal global climate disclosure partner for the ISSB. It offers a reliable solution that aids companies in their journey to meet the ISSB Standards. Recently, the CDP launched a new platform, extending its reach to an impressive 75,000 organizations [4]. The CDP’s 2024 questionnaire, designed in accordance with the IFRS S2, establishes the foundational baseline for its climate disclosure. This alignment positions the CDP as a pivotal resource in enhancing transparency, facilitating sustainable reporting practices, and promoting corporate compliance with the standards.
CDP CEO Sherry Madera stated: “The ISSB’s climate Standard is the foundational baseline for CDP’s climate disclosure. Our new questionnaire, open now for 2024 disclosure, is aligned with IFRS S2. This means that companies can disclose IFRS S2-aligned climate data directly to their stakeholders through CDP, enhancing data availability and accessibility for investors, lenders and buyers across the globe. With many thousands of UK companies gathered at London Climate Action Week likely to face mandatory ISSB reporting in the future, now is the time to get prepared by disclosing through CDP.”
Going Forward
The recent actions taken by the ISSB mark substantial strides in the direction for creating globally uniform and reliable sustainability reporting standards.
The ISSB’s primary objective is to simplify the intricate process of sustainability reporting for companies across the globe, thereby making this crucial task less daunting. By providing more definitive guidelines, the ISSB is paving the way for the enhancement of the quality, consistency, and comparability of sustainability information disclosed by companies. This initiative is designed to empower key players such as investors, regulatory bodies, and other stakeholders by equipping them with reliable and actionable sustainability data for informed decision-making.
As the ISSB rolls out its comprehensive two-year work plan, these ongoing efforts and innovations firmly reinforce the organization’s unwavering commitment. The ISSB is dedicated to setting a universal benchmark for sustainability-related financial disclosures, aiming to drive all industries towards the attainment of sustainable operations.
Ultimately, the ISSB’s initiatives are poised to foster a more sustainable global economy. This ambition champions the adoption of more responsible business practices and promotes long-term economic growth that equally respects societal needs and environmental boundaries.
References:
[1] https://www.ifrs.org/news-and-events/events/2024/june/ifrs-foundation-conference-2024/
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