ISSB to Standardise Reporting on Climate Transition Plans and GHG Emissions
ISSB to Standardise Reporting on Climate Transition Plans and GHG Emissions
The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced its plans to harmonise sustainability reporting requirements for companies, with a focus on areas including disclosure of corporate climate transition plans and the measurement of greenhouse gas (GHG) emissions across the value chain.
With this new initiative, the IFRS Foundation will assume responsibility for the Transition Task Force disclosure framework and aim to ensure compatibility between the organisations’ GHG reporting standards. The ISSB was launched in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements enabling a consistent understanding of the effect of sustainability risks and opportunities on companies’ prospects.
One of the key goals of the ISSB was to enable a reduction in the complexity of multiple sources of sustainability reporting initiatives. The ISSB has to date consolidated the Climate Disclosure Standards Board (CDSB), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB). This while announcing that it would take over responsibility for monitoring progress of companies’ climate-related disclosures from the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD).
The ISSB released its inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards last year. The board recently revealed that its upcoming activities will prioritise activities including pursuing connectivity between the IFRS’ sustainability and financial disclosure standards and interoperability between its sustainability standards and others. Companies developing and disclosing transition plans need clear and consistent guidance.
The GHG Protocol establishes comprehensive global standardised frameworks to measure and manage GHG emissions from private and public sector operations, value chains and mitigation actions. Under the new agreement, the IFRS Foundation and GHG Protocol will put in place governance arrangements for the ISSB to engage in updates and decisions made in relation to the GHG Protocol standards and guidance. The collaboration between the two parties will be a great benefit to companies seeking to measure, manage and report on their GHG emissions.
These new announcements form the latest in a series of moves by the ISSB aimed at harmonising sustainability reporting, including a recently announced alignments with CDP and the GRI, and an agreement to consider how to build upon the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD).