The International Sustainability Standards Board (ISSB) has published proposals that aim to provide the financial markets with a global baseline of sustainability disclosures when finalised.
The guidelines have been developed in response to requests from G20 leaders, the International Organisation of Securities Commissions (IOSCO) and others for enhanced information from companies on sustainability-related risks and opportunities.
They set out requirements for the disclosure of material information about a company’s significant sustainability-related risks and opportunities that is necessary for investors to assess a company’s enterprise value.
They are divided into two exposure drafts, with the first setting out general sustainability-related disclosure requirements.
The second details specific climate-related disclosure requirements and is broken down into Scope 1 – a company’s direct emissions of carbon dioxide in metric tonnes and Scope 2 – indirect emissions from the energy it has bought.
It also includes Scope 3 (all other indirect emissions, such as from suppliers.
The ISSB’s proposals build on the work of the Climate Disclosure Standards Board, the International Accounting Standards Board, the Value Reporting Foundation, which houses Integrated Reporting and SASB Standards, the Task Force on Climate-Related Financial Disclosures (TCFD) and the World Economic Forum.
Later this year, the ISSB will consult on its standard-setting priorities.
Feedback is expected by 29 July 2022 and the aim is to issue the new standards by the end of the year.
“Rarely do governments, policymakers and the private sector align behind a common cause,” said ISSB CEO Emmanuel Faber. “However, all agree on the importance of high-quality, globally comparable sustainability information for the capital markets.”
He added, “These proposals define what information to disclose, and where and how to disclose it.”
Ashley Alder, Chairman of the IOSCO board, noted, “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. 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.”
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