Harmonising Global Sustainability Disclosures: ISSB one year on
Today not only marks the start of London Climate Week 2024, but also, we’re celebrating the first birthday of the International Sustainability Standards Board (ISSB) 🎂
When the ISSB standards landed a year ago, it was as if Christmas came early for accountants 🎁 We delved right into the standards and shared the summary linked.
Chair of the ISSB, Emmanuel Faber said, “ISSB standards are designed to create a global baseline of sustainability-related financial language” which made the direction of travel clear to the world of reporting - “carbon accounting” was on the way to becoming “accounting”, sumday was coming sooner than we all may have expected.
Now one year on, the ISSB has 20+ jurisdictions adopting or taking steps to introduce the standards in their legal or regulatory frameworks. With Canada, Japan, and Singapore as the latest ones, together, these 20+ jurisdictions account for nearly 55% of global gross domestic product (GDP) and more than 40% of global market capitalisation.
ISSB continues on its path towards harmonising global sustainability disclosures (working towards saving everyone from the alphabet soup of reporting acronyms!) and announced a few exciting collaborations today.
What was announced?
IFRS announced a few key strategic relationships between ISSB and each of the Transition Plan Taskforce, GHG Protocol, CDP, Taskforce on Nature-related Financial Disclosures and Global Reporting Initiative.
Transition Plan Taskforce
IFRS will be formally taking over responsibility for the disclosure-specific materials developed by the Transition Plan Taskforce. The Transition Plan Taskforce (TPT) Disclosure Framework aims to develop a gold standard for best practice climate transition plans. TPT aims to help organisations set out a credible and robust climate transition plan to include as part of their annual reporting on forward business strategy - particularly covering how they plan to meet climate targets, manage climate-related risks, and contribute to the economy-wide climate transition. Learn more with this one pager from The TPT Recommendations.
Partnership with Greenhouse Gas Protocol (GHG Protocol)
The two have signed a MOU to guide future work and collaboration between the GHG Protocol and the ISSB, the objective is to measure greenhouse gas emissions effectively and to ensure that the information provided meets the needs of capital markets.
This is a great sign for standardising the measurement of greenhouse gas emissions and approach towards carbon accounting. Sumday was built based on compliance with these standards too.
As Ani Dasgupta, WRI President and CEO, puts it,
“For years, companies faced inconsistent greenhouse gas reporting requirements across different platforms and capital markets. This meant they struggled with conflicting paperwork when they should have been focusing on driving down emissions and reducing climate-related risks. But when ISSB decided to use the GHG Protocol’s corporate standard as the basis for measurement of GHG emissions in its climate standard (IFRS S2), it brought clarity and consistency in reporting for companies and capital markets that was sorely needed. Going forward, this formal partnership will bring GHG Protocol and ISSB even closer together, I hope that this will empower companies and the financial sector continue to make credible progress towards achieving their climate goals.”
Source: GHG Protocol Press Release
🎓 Learn more with What is the GHG Protocol?
Partnership with CDP
The two will continue working closely to align reporting requirements, CDP’s 2024 questionnaire is aligned with IFRS S2 as the foundational baseline for CDP’s climate disclosure.
🎓 Learn more with A summary: Carbon Disclosure Project (CDP)
Full interoperability with Global Reporting Initiative (GRI)
The ISSB and GRI’s Global Sustainability Standards Board (GSSB) have agreed to work together to align common disclosures that meet the information needs of their respective standards, aiming to create a cohesive global sustainability reporting system. This unified approach will help companies fulfil the information requirements of both investors and a wider range of stakeholders across the globe.
🎓 Learn more with A summary: Global Reporting Initiative (GRI)
Taskforce on Nature-related Financial Disclosures (TNFD)
ISSB is reviewing recommendations from TNFD to consider how to integrate and/or develop harmonised approaches within disclosures.
Benefits for Stakeholders
For investors, the harmonised standards will provide clearer, more reliable data to inform decision-making. Companies will benefit from reduced complexity and improved efficiency in their reporting processes. Overall, the ISSB's initiative is expected to drive better sustainability practices and transparency on a global scale.
There’s no denying the finance team now has a key role to play in sustainability as well - if you need a hand convincing them to jump on board, just get in touch - we’ll step through these updates and what it means for your company in a super practical way.
For more detailed information, visit the IFRS announcement.
