ISSB delivers further harmonisation of the sustainability disclosure landscape as it embarks on new work plan

• Developments in strategic relationships between ISSB and each of the Transition Plan Taskforce, GHG Protocol, CDP, Taskforce on Nature-related Financial Disclosures and Global Reporting Initiative
• ISSB publishes Feedback Statement as it embarks on new two-year work plan
• Key engagements at IFRS Foundation Conference and London Climate Action Week as ISSB work advances

Today—at the IFRS Foundation Conference coinciding with London Climate Action Week—ISSB Chair Emmanuel Faber will announce further harmonisation of the sustainability reporting landscape, as the International Sustainability Standards Board (ISSB) embarks on its new two-year work plan and publishes the Feedback Statement on that work plan.

Key drivers that led the IFRS Foundation to establish the ISSB include the need to address the proliferation of voluntary initiatives in the sustainability disclosure landscape; to ensure that investors receive high-quality, comparable information about sustainability-related risks and opportunities; and to enable companies to provide such information to their investors efficiently.

Since the outset, the ISSB has worked to reduce the complexity of multiple sources of sustainability reporting initiatives, while building on the established expertise and practice associated with market-leading frameworks and standards.

The creation of the ISSB involved the consolidation of the Climate Disclosure Standards Board (CDSB), Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) with the IFRS Foundation. Furthermore, the Task Force on Climate-related Financial Disclosures (TCFD) was disbanded following publication of the ISSB’s inaugural Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

The ISSB works closely with the body that brings together international securities regulators—IOSCO—as well as directly with jurisdictions, including through its Jurisdictional Working Group to support steps towards the use of the ISSB Standards. More than 20 jurisdictions have already decided to use or are taking steps to introduce ISSB Standards in their legal or regulatory frameworks. Together, these jurisdictions account for nearly 55% of global gross domestic product (GDP) and more than 40% of global market capitalisation.

During the next two years, the ISSB will deliver further harmonisation and consolidation of the disclosure landscape in response to market demand.

Harmonising disclosures about transition plans

Globally, disclosures on an entity’s plans to address any targets it has in place to transition to a lower-carbon economy—often called transition plans—are a growing proportion of corporate climate-related disclosures. IFRS S2 requires that information be disclosed if an entity has such a plan. To support application of these disclosure requirements and to reduce fragmentation in information provided in the market, the ISSB plans to support work to streamline and consolidate frameworks and standards for disclosures about transition plans.

This will also align with the ISSB’s focus on supporting the implementation of IFRS S1 and IFRS S2 over the next two years. The focus of the ISSB in this regard will continue to be on the provision of high-quality, decision-useful information about the plans that companies have, consistent with the focus of IFRS S2, rather than requiring that companies engage in transition planning, per se. 

To achieve this, first, the IFRS Foundation will assume responsibility for the disclosure-specific materials developed by the Transition Plan Taskforce, whose disclosure framework and related guidance draws on components identified by the Glasgow Finance Alliance for Net Zero (GFANZ)^[1]. The disclosure-specific materials will be housed on the IFRS Sustainability Knowledge Hub. 

In the near term, the IFRS Foundation expects to use these materials to develop educational materials, ensuring that they do not change the requirements in IFRS S2, by tailoring them to ensure global applicability and to deliver full compatibility with the global baseline and IFRS S2’s focus on disclosures of the climate-related risks and opportunities affecting an entity’s prospects, to meet the needs of investors and the financial markets.

Over time, the ISSB will consider the need to enhance the application guidance within IFRS S2. In so doing, the ISSB will utilise these materials, as relevant, to support the provision of high-quality disclosures to meet investors’ information needs. Any such enhancements would be undertaken in accordance with the IFRS Foundation’s due process and mission. 

Measuring greenhouse gas (GHG) emissions effectively

IFRS S2 requires GHG emissions to be measured in accordance with the GHG Protocol Corporate Standard (2004), given its wide use around the world. Furthermore, IFRS S2 requires companies to use the categories of Scope 3 as set out in the Corporate Value Chain (Scope 3) Standard (2011).

To ensure ongoing compatibility between the work of the GHG Protocol and the ISSB and to ensure that the information provided meets the needs of capital markets, the IFRS Foundation and GHG Protocol have signed a Memorandum of Understanding to put in place governance arrangements so that the ISSB is actively engaged in updates and decisions made in relation to the GHG Protocol standards and guidance. This includes the appointment of a representative of the ISSB as an observer on the GHG Protocol Independent Standards Board.

Partnering with CDP to deliver alignment

CDP is the ISSB’s key global climate disclosure partner providing a trusted tool that supports companies on their path to compliance with ISSB Standards.

Earlier this month, CDP opened its new platform to 75,000 organisations. CDP’s 2024 questionnaire is aligned with IFRS S2 as the foundational baseline for CDP’s climate disclosure.

Full interoperability with Global Reporting Initiative (GRI)

As per the significant announcement between the IFRS Foundation and GRI in May 2024, the ISSB and GRI’s Global Sustainability Standards Board (GSSB) have committed to jointly identify and align common disclosures that address information needs under the distinct scopes and purposes of their respective standards, for both thematic and sector-based standard-setting.

This collaboration seeks to provide a seamless, global and comprehensive sustainability reporting system for companies looking to meet the information needs of both investors and a broader range of stakeholders.

Informed by the Taskforce on Nature-related Financial Disclosures

Finally, as set out in the ISSB’s Feedback Statement published today, the ISSB will look at how it might build from relevant initiatives to meet the information needs of investors as it embarks on its research project on biodiversity, ecosystems and ecosystem services.

The ISSB has agreed that in undertaking this research, it will consider how to build upon the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) published in September 2023.

London Climate Action Week

Today, ISSB Vice-Chair Sue Lloyd and London Stock Exchange Group CEO David Schwimmer opened the London Stock Exchange, marking one year since the launch of the inaugural ISSB Standards.

The market opening was followed by a panel discussion during which Sue Lloyd discussed with Aviva CEO and Co-Chair of the Transition Plan Taskforce Amanda Blanc, GFANZ Vice-Chair Mary Schapiro and IOSCO Chair Jean-Paul Servais the plans for the ISSB to assume responsibility for the Transition Plan Taskforce’s disclosure-related materials.

Tomorrow—Tuesday 25 June—the Deloitte Academy in collaboration with the ISSB will host a hybrid event about advancing harmonisation through the ISSB, between 14:00–15:30 BST. The ISSB will be joined by speakers from CDP, GHG Protocol, GRI and TNFD. You can watch the event live.

ISSB Chair Emmanuel Faber said:

As we embark on our new two-year work plan that will see us strengthen and build out the global baseline of sustainability-related financial disclosures, I am grateful to our partners in the sustainability reporting landscape for their commitment to delivering an efficient, effective sustainability disclosure system for capital markets.

IOSCO Chair Jean-Paul Servais said:

Transition plans are increasingly being considered by investors as part of their broader review of climate disclosures and, where they are published by corporates, would benefit from a level of consistency and comparability to assist investors in their decision-making. In that context, the ISSB providing further educational material on its existing language will be helpful to market participants. IOSCO is undertaking its own engagement on transition plan disclosures and is considering the role of markets regulators in promoting integrity and mitigating greenwashing in that regard.

Financial Stability Board Chair Klaas Knot said:

The ISSB Standards strengthen the comparability, consistency and decision usefulness of climate-related financial disclosures around the world. The interest from users of disclosures in comparability and consistency applies to all elements of disclosures, including transition plans. The FSB is currently analysing the relevance of transitions plans for financial stability. So I welcome the ISSB announcement to support users of IFRS S2 in providing disclosures about their transition plans.

Aviva Group Chief Executive Officer and Transition Plan Taskforce Co-Chair Amanda Blanc DBE said:

Companies developing and disclosing transition plans need clear and consistent guidance. Today’s announcement that the International Sustainability Standards Board will look to use the resources we have developed in the Transition Plan Taskforce is brilliant news and an important step towards greater consistency and clarity.

GHG Protocol Independent Standards Board Chair Professor Alexander Bassen said:

This coordination between the IFRS Foundation and GHG Protocol is a momentous step in standardising GHG reporting globally. The deepening of the collaboration between the two parties will be a great benefit to companies seeking to measure, manage and report on their GHG emissions, and close collaboration with the IFRS Foundation will be invaluable to GHG Protocol’s standards update process for the suite of corporate standards.

GRI CEO Eelco van der Enden said:

Robust and effective sustainability reporting, which meets the needs of investors and other stakeholders, won’t be achieved without well-harmonised and aligned global standards. That is why the strengthened collaboration between GRI and the IFRS Foundation has been widely welcomed. Together, we are working towards streamlined and seamless corporate reporting on an organisation’s impacts, risks and opportunities, using GRI and ISSB standards.

CDP CEO Sherry Madera said:

CDP is proud to be ISSB’s key climate disclosure partner. This year, CDP is a better partner for corporates, cities, states and regions than ever before, making their disclosure even more efficient as we align with global standards. Our ISSB partnership is a critical step, answering market demand for efficiency and enabling better understanding through the power of data.

The ISSB’s climate Standard is the foundational baseline for CDP’s climate disclosure. Our new questionnaire, open now for 2024 disclosure, is aligned with IFRS S2. This means that companies can disclose IFRS S2-aligned climate data directly to their stakeholders through CDP, enhancing data availability and accessibility for investors, lenders and buyers across the globe. With many thousands of UK companies gathered at London Climate Action Week likely to face mandatory ISSB reporting in the future, now is the time to get prepared by disclosing through CDP.

Taskforce on Nature-related Financial Disclosures Co-Chair David Craig said:

The ISSB has been a valued partner to the TNFD since the Taskforce commenced its work in late 2021, providing input into our recommendations published last year. We are delighted to now be reciprocating by supporting the ISSB as it advances its research on nature that will include work focused on the recommendations of the TNFD. Bringing nature-related issues into the global baseline for sustainability disclosures is a critical next step in encouraging companies to provide comprehensive, material information about their risks and opportunities across the full spectrum of planetary boundaries not just climate change.

^[1] GFANZ has developed a global transition plan framework to support firms undertaking transition planning. The Transition Plan Taskforce has drawn on components of GFANZ’s work to develop an aligned set of transition plan disclosure guidance.