IFRS Foundation Releases Guide on Sustainability Risk Disclosure
The IFRS Foundation has released a report showcasing global strides in both mandated and voluntary climate-related disclosures. The ​report, presented to the Financial Stability Board (FSB), highlights that over 1,000 companies now reference International Sustainability ​Standards Board (ISSB) guidelines, while 30 jurisdictions are actively integrating ISSB Standards into their regulatory ​frameworks. This marks a significant milestone in aligning corporate reporting with climate-focused principles.
The ​report reveals that 82% of companies disclose ​information aligned with at least one of the 11 recommendations by the Task ​Force on Climate-related Financial Disclosures (TCFD). However, only ​3% meet ​all TCFD recommendations, leaving material ​gaps in governance, strategy, and risk-related disclosures. This lack of comprehensive reporting underscores a pressing need for regulatory adoption of ISSB Standards, endorsed by IOSCO in July 2023.
A notable feature of the report is its ​analysis ​of jurisdictional trends. All 29 ​jurisdictions with ​finalized climate disclosure proposals mandate Scope 3 greenhouse ​gas (GHG) emissions reporting, reflecting a growing emphasis on full-value chain transparency. Additionally, 28 jurisdictions are incorporating industry-specific disclosure requirements, ​tailoring sustainability metrics to sector-specific impacts and ​dependencies.
The transition from TCFD to ISSB Standards is expected to streamline reporting practices and enhance the reliability of climate-related financial data. By ​moving from voluntary frameworks to mandated disclosures, companies and ​investors will benefit from improved decision-useful information, vital for assessing and ​pricing climate risks and opportunities in global markets.
This report underscores the ​IFRS Foundation’s leadership in sustainability reporting, offering a roadmap for robust climate disclosures that align with international standards. Its findings pave the way for enhanced ​corporate accountability and the widespread adoption of practices essential ​for addressing climate challenges.
The ​report reveals that 82% of companies disclose ​information aligned with at least one of the 11 recommendations by the Task ​Force on Climate-related Financial Disclosures (TCFD). However, only ​3% meet ​all TCFD recommendations, leaving material ​gaps in governance, strategy, and risk-related disclosures. This lack of comprehensive reporting underscores a pressing need for regulatory adoption of ISSB Standards, endorsed by IOSCO in July 2023.
A notable feature of the report is its ​analysis ​of jurisdictional trends. All 29 ​jurisdictions with ​finalized climate disclosure proposals mandate Scope 3 greenhouse ​gas (GHG) emissions reporting, reflecting a growing emphasis on full-value chain transparency. Additionally, 28 jurisdictions are incorporating industry-specific disclosure requirements, ​tailoring sustainability metrics to sector-specific impacts and ​dependencies.
The transition from TCFD to ISSB Standards is expected to streamline reporting practices and enhance the reliability of climate-related financial data. By ​moving from voluntary frameworks to mandated disclosures, companies and ​investors will benefit from improved decision-useful information, vital for assessing and ​pricing climate risks and opportunities in global markets.
This report underscores the ​IFRS Foundation’s leadership in sustainability reporting, offering a roadmap for robust climate disclosures that align with international standards. Its findings pave the way for enhanced ​corporate accountability and the widespread adoption of practices essential ​for addressing climate challenges.
Sources:
​www.ifrs.org
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