The International Sustainability Standards Board (ISSB), established at COP26 to develop a comprehensive global baseline of sustainability disclosures for the capital markets, launched a consultation and released Exposure Drafts of proposals for its first two proposed standards. One sets out general sustainability-related disclosure requirements and the other specifies climate-related disclosure requirements.
These proposals are:
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information; and
- IFRS S2 Climate-related Disclosures.
The proposals set out requirements for the disclosure of material information about a company’s significant sustainability-related risks and opportunities that is necessary for investors to assess a company’s enterprise value. The final standards, when issued, are intended to form a comprehensive global baseline of sustainability disclosures designed to meet the information needs of investors in assessing that value. The ISSB is working closely with other international organizations and jurisdictions to support the inclusion of the global baseline into jurisdictional requirements.
The Exposure Drafts build on the work of the Climate Disclosure Standards Board, the IASB, the Value Reporting Foundation (which houses Integrated Reporting and SASB Standards), the Task Force on Climate-Related Financial Disclosures (TCFD) and the World Economic Forum.
Standards Development Plan
The ISSB developed the proposals in response to requests from G20 leaders, the International Organization of Securities Commissions (IOSCO), and others for enhanced information from companies on sustainability-related risks and opportunities.
Later this year, the ISSB will consult on its standard-setting priorities. This consultation will include seeking feedback on the sustainability-related information needs of investors and on further development of industry-based requirements, building on SASB Standards, which address a broad range of sustainability matters. Also today, the ISSB has set out its plan for how its work will build on the SASB Standards and industry-based standard-setting processes.
Commenting on the releases, Emmanuel Faber, Chair of the ISSB, noted “[r]arely do governments, policymakers and the private sector align behind a common cause. However, all agree on the importance of high-quality, globally comparable sustainability information for the capital markets. These proposals define what information to disclose, and where and how to disclose it. Now is the time to get involved and comment on the proposals.”
In developing the proposed IFRS Sustainability Disclosure Standards, the ISSB followed due process, consistent with that used to develop IFRS Accounting Standards. As required by the IFRS Foundation’s Constitution, the IFRS Foundation Trustees’ Due Process Oversight Committee has overseen the decision by the ISSB Chair and Vice-Chair to publish these exposure drafts before the ISSB is quorate.