The International Sustainability Standards Board (ISSB) is a widely adopted framework that provides guidelines for assessing and reporting sustainability performance in organizations. It sets out four key objectives:
to develop standards for a global baseline of sustainability disclosures;
to meet the information needs of investors;
to enable companies to provide comprehensive sustainability information to global capital markets; and
to facilitate interoperability with disclosures that are jurisdiction-specific and/or aimed at broader stakeholder groups.
The launch of the first set of ISSB standards on 26 June 2023 marked one of the first endeavors towards establishing a global baseline in sustainable reporting and there is legislation and guidance being produced in America and Europe.
Recently, changes have been proposed to Sections S1 and S2 of the ISSB, primarily focus on strengthening the requirements related to climate change mitigation and adaptation, as well as social responsibility.
Background to ISSB
The International Sustainability Standards Board (ISSB) was formed by the IFRS in November 2021 following COP26 in Glasgow and builds on the work of market-led investor-focused reporting initiatives, including the Climate Disclosure Standards Board (CDSB), the Task Force for Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework and industry-based SASB Standards, as well as the World Economic Forum’s Stakeholder Capitalism Metrics.
Here's a look at some of the key players in this development, namely the GRI, TCFD, IFRS and CDSB.
(1) Global Reporting Initiative (website)
The Global Reporting Initiative is an international independent standards organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change, human rights, and corruption.
(2) Task Force on Climate-related Financial Disclosures (website)
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. The TCFD disclosure recommendations are structured around four thematic areas that represent core elements of how companies operate: governance, strategy, risk management, and metrics and targets.
The four recommendations are interrelated and supported by 11 recommended disclosures that build out the framework with information that should help investors and others understand how reporting organizations think about and assess climate-related risks and opportunities.
(3) IFRS Foundation (website)
The International Financial Reporting Standards (IFRS) Foundation is a not-for-profit, public interest organization established to develop high-quality, understandable, enforceable and globally accepted accounting standards. The IFRS overseas International Accounting Standards Board, responsible for setting accounting standards, as well as the consolidation of the sustainable disclosure standards.
Integrated Reporting (website)
The International Integrated Reporting Framework and Integrated Thinking Principles provide a framework to advance communication about value creation, preservation and erosion. The framework provides a list of principles and content guidance for users to incorporate in their reporting. The IFRS Foundation’s International Accounting Standards Board (IASB) and International Sustainability Standards Board (ISSB) are jointly responsible for the Integrated Reporting Framework.
Sustainable Accounting Standards Board (website)
The Sustainable Accounting Standards Board (SASB) was founded as a nonprofit organization in 2011 to help businesses and investors develop a common language about the financial impacts of sustainability. SAB offered a useful ESG materiality map often used by investors to support ESG integration.
Value Reporting Foundation (website)
In November 2020 the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) announced their intention to merge into the Value Reporting Foundation, which was officially formed in June 2021. The Value Reporting Foundation offered a comprehensive suite of resources—including the Integrated Thinking Principles, Integrated Reporting Framework and SASB Standards—designed to help businesses and investors develop a shared understanding of enterprise value.
(4) Climate Disclosure Standards Board (website)
The CDSB Framework formed a foundation for the Task Force for Climate-Related Financial Disclosures (TCFD) recommendations. The CDSB Framework sets out an approach for reporting environmental and social information in mainstream reports, such as annual reports, 10-K filing, or integrated report. On 31st January 2022, the CDSB was consolidated into the IFRS Foundation to support the work of the newly established International Sustainability Standards Board (ISSB).
Climate Disclosure Project (website)
The Climate Disclosure Project (CDP) is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impact. CDP focusses on climate, forests and water disclosure. By working together, CDP and CDSB offer a complete system for climate disclosure and elements of environmental and natural capital disclosure.
Comentários