The International Sustainability Standards Board (ISSB) is planning to finalize two proposed standards, one on climate-related disclosures and the other on general sustainability-related disclosures, the Wall Street Journal reported. They would be the first two standards issued by the ISSB since its creation in November 2021 at the United Nations Climate Change Conference (COP26).

“Climate is going to be finalized in the next few months. And then quite naturally, we’re now looking at what’s next,” said ISSB Chair Emmanuel Faber.  

The proposals, which drew more than 1,300 comments through July 29, are voluntary, as jurisdictions of individual nations can adopt the standards to make them binding for companies under their respective jurisdictions. Companies can also voluntarily adopt the standards.

CFOs told the Journal that they wondered how the proposed ISSB standards would interact with those proposed by the Securities and Exchange Commission (SEC) at about the same time last year. That proposal, which would impose mandatory disclosure requirements on greenhouse-gas emissions and climate risks, prompted concerns from many CFOs that their companies would have to disclose confidential information

Faber told the Journal that the ISSB is monitoring the actions of the SEC as well as those of other standard setters, saying “We are not standard-setting in a vacuum.” He also addressed companies’ concerns stemming from the ISSB’s October vote to require companies to disclose Scope 3 emissions, such as methodologies and lack of data.  

“We’ve dealt with the feedback,” he said, adding that companies won’t have to disclose these emissions under the ISSB proposal for at least a year and will be able to include information that isn’t aligned with their reporting period if their suppliers have a different reporting cycle.

Accounting professors told the Journal that companies and investors will benefit from a baseline standard on sustainability-related disclosures. But one, Carol Adams of Durham University Business School, noted that companies have discretion in determining what constitutes relevant information.

“The amount of judgment involved means there won’t be a level playing field,” she said.