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ISSB to Give Priority to Climate Risk Disclosures in Initial Reporting

S.J. Steinhardt
Published Date:
Apr 5, 2023

The International Sustainability Standards Board (ISSB) will provide transitional reliefs to companies applying the ISSB’s first two standards—S1 (general requirements) and S2 (climate)—by allowing them to focus their initial efforts on ensuring they meet investor information needs around climate change.  

The relief allows companies to implement reporting practices and structures to provide necessary information about climate-related risks and opportunities in the first year of reporting using the ISSB standards. After that first year, companies will need to provide full reporting on sustainability-related risks and opportunities, beyond climate.

For the first year that they use the ISSB standards, companies will not be required to:

● provide disclosures about sustainability-related risks and opportunities beyond climate-related information;
● provide annual sustainability-related disclosures at the same time as the related financial statements;
● provide comparative information;
● disclose Scope 3 greenhouse gas emissions; and
● use the Green House Gas Protocol to measure emissions, if they are currently using a different approach.

Companies that only report on climate-related risks and opportunities in the first year will be afforded additional relief from providing comparative information, the ISSB decided. That means that they do not have to provide comparative information about their sustainability-related risks and opportunities beyond climate in their second year of reporting. Companies will still need to apply S1 standards in the first year they use the ISSB standards to meet general disclosure requirements where they relate to climate.

“The upcoming introduction of the ISSB’s Standards establishing the global baseline is being welcomed by companies urgently looking for tools to meet the information needs of their investors. This transitional relief ensures companies can phase in their approach, initially focusing on the quality of the climate-related information they provide,” ISSB chairman Emmanuel Faber said in a statement. “That said, companies around the world are not all starting from the same place. We expect many of the companies that already disclose information beyond climate to continue to do so, including the 2,500 plus companies already applying the SASB Standards.”

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