The IFRS Foundation has unveiled a progress report highlighting significant advancements in the adoption of the International Sustainability Standards Board (ISSB) Standards across the globe. Over 1,000 companies have begun referencing the ISSB in their reports, while 30 jurisdictions are making strides toward integrating these standards into legal and regulatory frameworks. This move reflects a growing shift from voluntary to mandated sustainability disclosures, aiming to provide more robust and comparable information for investors.
The report underscores the alignment of ISSB Standards with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), whose responsibilities were assumed by the IFRS Foundation following the TCFD’s disbandment in 2023. Notably, 82% of companies disclosed at least one of the 11 TCFD recommendations, yet only 3% provided comprehensive coverage. This gap underscores the pressing need for detailed climate-related governance, strategy, risk management, and metrics disclosures to enable investors to assess and price climate risks accurately.
Jurisdictions are increasingly emphasizing critical elements of ISSB Standards, including Scope 3 greenhouse gas (GHG) emissions and industry-specific disclosure requirements. Of the 30 jurisdictions advancing ISSB integration, 29 have included Scope 3 GHG disclosures, while 28 are incorporating or considering industry-specific requirements. Most jurisdictions aim to encompass the broader spectrum of sustainability risks and opportunities, with some initially focusing on climate-related aspects. These developments are crucial as global stakeholders push for a streamlined reporting regime to avoid regulatory fragmentation.
The ISSB’s emphasis on industry-specific disclosures draws heavily from the Sustainability Accounting Standards Board (SASB) framework, the leading global suite for such standards. This alignment ensures high-quality implementation of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, supporting comparability and utility for capital markets. Emmanuel Faber, Chair of the ISSB, acknowledged the progress but emphasized the need for further efforts to provide investors with the critical data required for effective decision-making.
These advancements, bolstered by jurisdictional initiatives and corporate commitment, signal a pivotal moment for sustainability-related disclosures. The adoption of ISSB Standards represents a transformative step toward enhancing transparency and comparability in global capital markets, ensuring they remain resilient and well-informed in the face of sustainability challenges.
Source: https://www.ifrs.org/news-and-events/news/2024/11/new-report-global-progress-corporate-climate-related-disclosures/
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