The International Sustainability Standards Board (ISSB) has launched a public consultation on the first two of its proposed global standards for climate and sustainability disclosures.
The widely anticipated proposals build on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and include industry-based disclosure requirements derived from the standards of the Sustainability Accounting Standards Board.
The initiative has received strong support from the Bank for International Settlements, the Network for Greening the Financial System, and individual central banks and financial supervisors.
The ISSB’s proposal sets out the general requirements for disclosing sustainability-related financial information and reporting on all related risks and opportunities. They include the requirement that “financial reporting shall include a complete, neutral and accurate depiction of its sustainability-related financial information”.
However the assessment of materiality is confined to information that “could reasonably be expected to influence primary users’ assessments of an entity’s enterprise value”, and does not include double materiality data on how the activities of the reporting entity affect the environment.
Examples of sustainability-related information to be reported include governance and decisions relating to sustainability-related risks and opportunities, as well as the effects of the organisation’s actions on its reputation.
The proposed climate-related disclosure requirements are organised around the TCFD’s structure encompassing governance, strategy, risk management, and metrics and targets. Reporting entities would also be required to refer to interrelationships among these four core elements, as well as how they relate to the general sustainability standards.
Reports on all absolute gross greenhouse gas emissions generated will be required, including scope 3 emissions from suppliers and customers.
“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,” said 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.”
The public consultation on the new ISSB proposals is open until 29 July. Submissions to each proposal may be made either through completing a survey or in a comment letter, and all comment letters received will be publicly available. The ISSB intends to review feedback on the proposals in the second half of 2022 with the aim of issuing the new standards by the end of the year.
Established at Cop26, the ISSB is an international effort to cut through the growing range of sustainability standards and to develop a comprehensive global baseline of sustainability disclosures for the capital markets. Working with the International Accounting Standards Board, the goal of the new body is to fill data gaps by providing quality information and international comparability to investors and financial regulators.
This page was last updated March 31, 2022
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