The IFRS Foundation’s International Sustainability Standards Board (ISSB) today announced a series of steps aimed at harmonizing sustainability reporting requirements for companies, focusing on areas such as the disclosure of companies’ climate transition plans and the measurement of greenhouse gas emissions (GHG) across the entire value chain. chain.
Under the new initiative, which is part of the ISSB’s new two-year work plan, the ISSB announced that the IFRS Foundation will take responsibility for the Transition Task Force’s disclosure framework and has signed an agreement with the GHG Protocol, aimed at ensuring compatibility between the organizations’ greenhouse gas reporting standards.
The ISSB was launched in November 2021 at the COP26 climate conference, with the aim of developing IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements that provide a consistent understanding of the impact of sustainability risks and opportunities on companies’ prospects.
One of the key objectives of the ISSB was to enable a reduction in the complexity of multi-source sustainability reporting initiatives. At launch, the ISSB consolidated the Climate Disclosure Standards Board (CDSB), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB), and last year the IFRS Foundation announced that it would assume responsibility for monitoring the would adopt progress on corporate climate-related disclosures from the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD).
The ISSB released its inaugural Common Sustainability (IFRS S1) and Climate Reporting Standards (IFRS S2) last year 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 pursuing connectivity between the IFRS sustainability and financial disclosure standards and interoperability between the sustainability standards and others, in addition to initiating new research and standard setting projects, supporting the implementation of IFRS S1 and IFRS S2, improving the sector-specific SASB standards and maintaining contacts with stakeholders.
The establishment of the Transition Plan Taskforce (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 taskforce released its TPT Disclosure Framework in October 2023, aimed at providing a “gold standard” for companies to develop and report on their climate transition plans.
According to the ISSB, the IFRS Foundation’s acquisition of the TPT’s disclosure-specific materials comes as a growing share of companies’ climate-related information includes reporting on targets for the transition to a low-carbon economy, with the move aimed at supporting the application of this information. disclosures – including IFRS S2’s requirement to disclose information where an entity has a transition plan – and to reduce the fragmentation of information provided to the market. The materials will now be housed on the IFRS Sustainability Knowledge Hub, with the IFRS Foundation aiming to use them in the short term to develop educational materials and deliver compatibility with IFRS S2, and in the longer term as part of its efforts to improve need to consider the application guidelines within IFRS S2.
Amanda Blanc, Group CEO of Aviva Group and co-chair of the Transition Plan Taskforce, said:
“Companies developing and publicizing transition plans need clear and consistent guidance. Today’s announcement that the International Sustainability Standards Board will seek to use the tools we have developed in the Transition Plan Taskforce is brilliant news and an important step towards greater consistency and clarity.”
The GHG Protocol establishes comprehensive global standardized frameworks for measuring and managing greenhouse gas emissions from private and public sector activities, value chains and mitigation measures. Under the new agreement, the IFRS Foundation and the GHG Protocol will implement governance arrangements to enable the ISSB to participate in updates and decisions made regarding the GHG Protocol standards and guidelines, with an ISSB representative appointed as an observer for the GHG Protocol. Independent Standards Board.
Professor Alexander Bassen, Chair of the GHG Protocol Independent Standards Board, said:
“This coordination between the IFRS Foundation and the GHG Protocol is an important step in standardizing greenhouse gas reporting worldwide. Deepening cooperation between the two parties will be a great benefit to companies looking to measure, manage and report their greenhouse gas emissions, and close cooperation with the IFRS Foundation will be invaluable to the process of updating the GHG Protocol standards for greenhouse gas emissions. set of corporate standards. .”
The new announcements mark the latest in a series of steps by the ISSB aimed at harmonizing sustainability reporting, including a recently announced alignment with CDP and the GRI, and an agreement to consider how to build on the recommendations of the Taskforce on Nature- related Financial Disclosures (TNFD).
ISSB Chairman Emmanuel Faber said:
“As we embark on our new two-year work plan, during which we will strengthen and build on the global baseline of sustainability-related financial disclosures, I am grateful to our partners across the sustainability reporting landscape for their commitment to delivering an efficient, effective sustainability information system for capital markets.”