A summary: International Sustainability Standards Board (ISSB)

The International Sustainability Standards Board (ISSB) was established in September 2021 by the International Financial Reporting Standards Foundation(IFRS) to develop and publish a set of sustainability reporting standards that can be used globally.

On June 26, 2023 the ISSB release their inaugural sustainability standards, these comprise of two interrelated standards:

• IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2 Climate-related Disclosures

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Who does it apply to:

The ISSB does not mandate the application of it’s IFRS Sustainability Disclosure Standards, however, it will be up to the jurisdictions to decide whether to require the application of these standards, just as they have decided whether to require the application of IFRS Accounting Standards.

The standard comes into effect for reporting periods starting 1 January 2024. The ISSB recognises however this is all pretty new for many organisation and as such have allowed a 12 month grace period for the following points:

1. If an organisation is using a method other than the GHG Protocol it can continue doing this for the first year
2. Organisations can choose not to disclose Scope 3 emissions for the first year

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What are the sections relevant to carbon accounting:

IFRS S2 contains the majority of information relevant to Carbon Accounting. Under section 29 the standards outline the specific presentation requires for Carbon related reporting requiring the following:

Disclose its absolute gross greenhouse gas emissions generated during the reporting period, expressed as metric tonnes of CO2equivalent across the following categories:

1. Scope 1 greenhouse gas emissions;
2. Scope 2 greenhouse gas emissions; and
3. Scope 3 greenhouse gas emissions;

In addition organisations are required to report on their carbon intensity based on the relevant metrics associated with their industry and specific operation.

Further more an organisation is required to disclose the approach it uses to measure its greenhouse gas emissions including:

1. The measurement approach, inputs and assumptions the entity uses to measure its greenhouse gas emissions;
2. The reason why the entity has chosen the measurement approach, inputs and assumptions it uses to measure its greenhouse gas emissions; and
3. Any changes the entity made to the measurement approach, inputs and assumptions during the reporting period and the reasons for those changes;

Finally the ISSB requires that users calculate carbon emissions based on the methods outlined under the GHG Protocol. Where emissions source relate to Investments/Financed emissions the standards then call for users to align calculation methods with the calculation methods outlined under the Financed Emissions Standards developed by the Partnership for Carbon Accounting Financials (PCAF).

Want to understand more? Read about the ISSB in our blog and or our detailed summary of the the key Climate Related sections.

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What are the disclosure requirements outside of carbon accounting that sumday advisors may be able to support:

Similar to the TCFD framework (linked TCFD summary), IFRS S2 requires companies disclose information on their governance, strategy, risk management, and metrics and targets related to climate-related risks and opportunities, which includes carbon accounting.

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Key takeaways for advisors:

• Sumday facilitates reporting of GHG emissions inline with the requirements under the ISSB Standards.
• Sumday enables transparent reporting of emissions factor sources and methods as well as facilitating the assessment of uncertainty associated with individual GHG calculations.
• ISSB requirements are broader than just emissions reporting and cover key areas such as climate risk. Sumday provides addition training resources and learning content to assist advisors in supporting their clients climate reporting and disclosure.

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Getting ready - what’s next:

You may consider supporting clients to get ready by:

• Reading through this guidance and the relevant sections
• Proposing a baseline emissions assessment to comply with emission reporting requirements
• Identifying the source of data that would enable the client to assess risks across other categories covered by the standards
• Making a plan to gather data that does not exist in anticipation of reporting requirements
• Creating a target timeline for data collection, revisions, assessment and reporting from now until mandatory disclosures are forecast to impact your client (2025).

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Disclosure examples:

N/A - no reports currently exist as the standards impact reporting periods from 1 January 2024 onwards. As the ISSB standards are based upon TCFD, we can reference the TCFD examples such as:

• Insurance, UK: https://www.aviva.com/sustainability/reporting/climate-related-financial-disclosure/
• Energy, US: https://www.aes.com/sites/default/files/2021-03/2021_AES_Climate_Scenario_vFinal.pdf
• In addition to the above examples, TCFD provides a register of organisations reporting against elements of the TCFD Framework which can be found on the organisations Report Database and TCFD Knowledge Hub's example disclosures.

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