As the newly-established International Sustainability Standards Board (ISSB) works to form its inaugural membership, discussion on the sustainability disclosure guidelines that the body will develop has begun.
Investor groups and major consulting firms have already published commentary and proposals in anticipation of a public consultation process expected later this year, reflecting the importance of what are expected to become universal climate and sustainability accounting standards.
Major consulting and accountancy firms such as Deloitte, KPMG, PWC and EY are also preparing their clients for the new standards, generally welcoming the simplification.
Announced during Cop26, the ISSB will work closely with the International Accounting Standards Board, which sets international accounting standards currently required in more than 140 jurisdictions around the world. The ISSB is intended to provide quality information and international comparability to investors and financial regulators, building on the work of the Task Force for Climate-related Financial Disclosures, the Climate Disclosure Standards Board, and other existing investor-focused reporting initiatives.
Faced with an ‘alphabet soup’ of different climate and sustainability reporting standards, central banks and financial regulators have consistently identified a lack of comparable data as a major barrier to climate and biodiversity action. The standards to be developed by the ISSB will help fill this gap, while moving corporate climate and sustainability reporting from often sidelined sustainability departments to the financial core of accountancy.
Data gaps have also frustrated investor groups focusing on climate change and sustainability, prompting early commentary ahead of what the ISSB has said will be a “thorough” and “timely” public consultation process to take place sometime this year. Principles for Responsible Investment, a UN-affiliated investor group, has issued a detailed draft position paper calling for a tighter approach to materiality assessments in the new standards,recommending that issuers be required to explain why data is omitted and include their supply chains in assessments.
The European Accounting Association has also expressed reservations about materiality in the ISSB process, warning that the upcoming ISSB standards may “serve the capital markets but at the expense of wider stakeholders, and ultimately, the wellbeing of our planet and our society”.
This page was last updated February 17, 2022
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