A year on from the announcement of its creation at COP26, the International Sustainability Standards Board (ISSB) has announced 20 organisations, including CDP, Principles for Responsible Investment (PRI) and the ‘big four’ accountants, have signed up as partners to help firms implement the disclosure standards.
The ISSB has announced a Partnership Framework at Sharm El-Sheikh’s COP27, designed to support investors and other capital market stakeholders as they prepare to use IFRS Sustainability Disclosure Standards.
It is also in discussions with the European Commission and the European Corporate Reporting Lab (EFRAG) to agree when is practical to implement the framework.
The ISSB was tasked with creating the global baseline for sustainability disclosure last year in Glasgow. Over the past year, it has consulted on how companies need to disclose on climate-related risks and opportunities, the definition of ‘materiality’ and the use of the Task Force on Climate-related Financial Disclosures (TCFD) architecture as the basis for its standards. It is due to be implemented in early 2023 and in the latest update on 21 October, it said companies will be required to disclose Scope 1, 2 and 3 greenhouse gas emissions, but will potentially have more time to report on Scope 3 disclosures, and also be supplied with “relief provisions” to help work out these disclosures.
Emmanuel Faber, chair of the ISSB, said: “As we’ve heard from stakeholders here at COP27, the need for climate-related financial disclosures is increasingly urgent. We are working collaboratively towards the implementation of effective sustainability disclosures for capital markets, which will empower market participants with the right information to support better economic and investment decision making.”
As the ISSB turns its attention from development to implementation, the Partnership Framework means the companies can seek out support around disclosure and become early adopters if they wish. The PRI, CDP, KPMG, Deloitte, PwC and EY are all partners as well as the UK Foreign, Commonwealth & Development Office (FCDO) and United Nations Environment Programme-Finance Initiative (UNEP-FI)*.
In a second announcement, the ISSB said CDP will incorporate the IFRS S2 Climate-related Disclosures [IFRS S2] requirements into its global environmental disclosure platform allowing CDP’s 17,000+ voluntary users to disclose data structured to IFRS S2 in the 2024 disclosure cycle.
CDP said it encourages companies to adopt ISSB voluntarily thereby providing investors with information they need sooner and “reducing the reporting burden on entities through an alignment of requirements”.
This will also act as an enabler of the Climate Data Steering Committee’s objective in launching a Net Zero Public Utility (NZDPU) to work towards the digitisation of core climate data, the announcement said.
Paul Dickinson, founder chair at CDP, said: “As the only global environmental disclosure platform, with over 18,700 companies – worth half of global market capitalisation – disclosing in 2022, CDP is uniquely positioned to scale the early adoption of the ISSB’s climate standard across the global economy. This will be critical in boosting corporate action and accountability, providing financial markets, governments and regulators with clear, comparable data to inform their decision making.”
*The full list of partners are: ACCA; Brazilian Institute of Corporate Governance (IBGC); CDP; Deloitte; Environmental Resources Management (ERM); European Accounting Association; EY; Global Reporting Initiative (GRI); Global Steering Group for Impact Investment (GSGII); Group of Latin American Accounting Standard Setters (GLASS); International Corporate Governance Network (ICGN); International Federation of Accountants (IFAC); KPMG; Nigerian Ministry of Finance, Budget and National Planning; Pan African Federation of Accountants; PRI; PwC; UK Foreign, Commonwealth & Development Office (FCDO); UN Department of Economic and Social Affairs (UNDESA); United Nations Environment Programme-Finance Initiative (UNEP-FI); UN Sustainable Stock Exchanges Initiative; and the We Mean Business Coalition.