The IFRS Foundation’s International Sustainability Standards Board (ISSB) today announced a number of steps to harmonize sustainability reporting requirements for companies, focusing on areas including disclosure of corporate climate change plans and measurement of greenhouse gas (GHG) emissions across the value chain.
As part of the new initiative, which is part of the ISSB’s new two-year work plan, the ISSB announced that the IFRS Foundation will take over responsibility for the Transition Task Force’s disclosure framework and that it has signed an agreement with the Greenhouse Gas Protocol to ensure compatibility. among organizations’ GHG reporting standards.
The ISSB was launched in November 2021 at the COP26 climate conference to develop IFRS Sustainability Disclosure Standards, based on demand from investors, companies, governments and regulators, to provide a global basis for disclosure requirements enabling a consistent understanding of the risk impact and opportunity sustainability outlook companies.
One of the key goals of the ISSB was to enable the reduction of the complexity of multiple sources of sustainability reporting initiatives. At launch, the ISSB brought together the Climate Disclosure Standards Board (CDSB), the International Integrated Reporting Council (IIRC) and the Sustainable Development Accounting Standards Board (SASB), and last year the IFRS Foundation announced it would take over responsibility for monitoring progress. corporate climate disclosures from the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures (TCFD).
Last year, the ISSB issued its inaugural General Sustainability (IFRS S1) and Climate (IFRS S2) reporting standards and subsequently launched a consultation on its priorities for its next two-year work plan, with the board recently revealing that its upcoming activities will prioritize activities including monitoring interconnectivity between the standards IFRS sustainability and financial disclosure standards and interoperability between their sustainability standards and others, in addition to starting new research and standardization projects, supporting the implementation of IFRS S1 and IFRS S2, strengthening industry-specific SASB standards and negotiations with stakeholders.
The creation of the Transition Plan Working Group (TPT) was also announced at COP26 by then Chancellor of the Exchequer and now UK Prime Minister Rishi Sunak and officially launched in April 2022. The Working Group released its TPT publication framework in October 2023, aimed at providing a “gold standard” companies to develop and report on their climate change plans.
According to the ISSB, the IFRS Foundation adopted TPT disclosure-specific materials as a result of the growing share of climate change-related disclosures, including reporting on low-carbon transition targets, a move aimed at supporting the application of this information. disclosure – including IFRS S2’s disclosure requirement if the entity has a transition plan – and in reducing the fragmentation of information provided to the market. The materials will now be housed in the IFRS Sustainability Knowledge Hub, with the IFRS Foundation looking to use them in the near term to develop educational materials and provide compatibility with IFRS S2, and in the longer term as part of its efforts to consider the need for improvements. application guidelines within IFRS S2.
Amanda Blanc, CEO of the Aviva Group and co-chair of the Transition Plan Taskforce, said:
“Companies developing and publishing transition plans need clear and consistent guidance. Today’s announcement that the International Sustainability Standards Board will seek to leverage the resources we have developed as part of the Transition Plan Taskforce is great news and an important step towards greater consistency and clarity.”
The Greenhouse Gas Protocol establishes comprehensive global standardized frameworks for measuring and managing greenhouse gas emissions from private and public sector operations, value chains and mitigation measures. Under the new agreement, the IFRS Foundation and the GHG Emissions Protocol will put in place a governance arrangement to allow the ISSB to be involved in updates and decisions made in relation to the GHG Protocol standards and guidance, with a representative of the ISSB appointed as an observer to the GHG Protocol Independent. Standards Council.
Chair of the Independent GHG Protocol Standards Board Professor Alexander Bassen said:
“This coordination between the IFRS Foundation and the Greenhouse Gas Protocol is a significant step in the global standardization of greenhouse gas emissions reporting. The deepening of cooperation between the two parties will be of great benefit to companies that want to measure, manage and report their GHG emissions, and close cooperation with the IFRS Foundation will be invaluable to the process of updating the GHG protocol standards for the corporate standards set. .”
The new announcements are the latest in a series of moves by the ISSB to harmonize sustainability reporting, including the recently announced alignment with CDP and GRI and an agreement to consider building on the recommendations of the Nature Finance Working Group. Disclosure (TNFD).
ISSB President Emmanuel Faber said:
“As we embark on our new two-year work plan that will see us strengthen and build a global foundation of sustainability-related financial disclosures, I am grateful to our sustainability reporting partners for their commitment to providing an efficient and effective sustainability disclosure system for capital markets.