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News

ISSB Report Lays Out Global Progress in Corporate Climate Disclosures

By:
Karen Sibayan
Published Date:
Nov 12, 2024

GettyImages-1189129733-wind-carbon-climate-change

More than 1,000 firms have referenced the International Sustainability Standards Board (ISSB) in their reports, and 30 jurisdictions are making progress in introducing ISSB Standards to their legal or regulatory frameworks, the ISSB stated in a release.

These facts are included as some of the key findings of a detailed progress report presented to the Financial Stability Board (FSB) by the IFRS Foundation on Nov. 12. The report also aligns disclosures with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The IFRS Foundation was responsible for recording climate-related disclosure progress in 2023 when the TCFD disbanded in 2023. 

"This progress report underscores the significant and encouraging progress in disclosure of climate-related information. But further action is needed to address the fact investors are still not receiving the information they need to assess and price appropriately climate and other sustainability-related risks and opportunities," stated ISSB Chair Emmanuel Faber. “Through jurisdictional initiatives and the voluntary choices companies are making, often in response to investor demand, we continue to see momentum build."  

According to ISSB, 82% of firms disclosed information in line with at least one of the 11 TCFD recommendations as firms globally pay attention to climate-related disclosures. But, with less than 3% of these firms reporting under all 11 TCFD recommended disclosures, only some offer disclosures that cover the firm's climate-related governance, strategy, risk management or metrics and targets. If the omitted information is material, it shows that investors need to get the information necessary to assess and price climate-related risks and opportunities. 

This is a crucial backdrop to the move to regulatory adoption of the ISSB Standards after IOSCO endorsed them in July 2023. The progress in introducing sustainability-related disclosure requirements by adopting ISSB Standards and the shift from recommended to mandated disclosures should lead to a rise in robust and material sustainability-related data for the global capital markets. 

Additionally, the report also shares information regarding the status of the 30 jurisdictions trying to introduce ISSB Standards in their regulatory frameworks and insights into how firms are transitioning from disclosures prepared utilizing the TCFD recommendations to those prepared to adopt ISSB Standards. 

A separate analysis by the IFRS Foundation on some key features in these 30 jurisdictional frameworks demonstrates the following:

• Jurisdictions recognize the value of Scope 3 GHG emissions disclosures.

• Jurisdictions see the value of including industry-specific disclosure requirements.

• Climate-related risks and opportunities are key to investors, but so are disclosures on the full spectrum of sustainability-related risks and opportunities.

In some instances, jurisdictions have moved closer to the ISSB Standards related to their initial proposals in response to stakeholders calls for greater alignment with ISSB Standards aimed at comparability of disclosures by adhering to the global baseline. 

Stakeholders, particularly investors and firms with considerable cross-border operations expected to be subject to over one set of jurisdictional requirements, see a risk in replacing the current patchwork of voluntary initiatives with regulatory fragmentation if jurisdictions change ISSB Standards extensively. Other firms are likely to be part of global supply chains. They also advocate for alignment with the worldwide baseline to ensure that a streamlined global reporting regime can avoid unnecessary burdens, the ISSB said.

A vital aspect of introducing ISSB Standards into regulatory frameworks is that several jurisdictions will introduce industry-specific disclosure requirements for the first time. These steps show the value of sector-specific disclosures for capital markets and the fact that the SASB Standards—which is the only comprehensive established suite of industry standards for sustainability disclosure globally—offer an essential component of the ISSB’s global baseline of disclosures supporting high-quality implementation of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.  

The Financial Stability Board also published its 2024 progress report on Achieving Consistent and Comparable Climate-related Disclosures on Nov. 12, which summarizes the key findings of the IFRS Foundation’s report.