The push for useful, comparable climate reporting standards took a big step forward today with the newly-created global standards setter, the International Sustainability Standards Board (ISSB), launching its first consultation on proposed standards.
The ISSB, which was set up at last year’s global climate conference (COP26), published draft standards for climate-related disclosure specifically, and sustainability disclosures generally.
The proposals are out for a 120-day comment period (to July 29), and are expected to be finalized by the end of the year.
The draft standards build upon the existing recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and set out requirements for companies to disclose material information about their sustainability-related risks and opportunities.
“Rarely 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,” said Emmanuel Faber, chair of the ISSB, in a release.
“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,” he added.
The global umbrella group of securities regulators, the International Organization of Securities Commissions (IOSCO), said that it will launch its review of the proposals immediately, with a view to endorsing the final standards.
Sheldon Mills, co-lead of the corporate reporting work under IOSCO’s Sustainable Finance Task Force, said his group would, “begin an in-depth review of the exposure drafts to determine whether they meet securities regulators’ expectations.”
“The group will consider: whether the proposed requirements can serve as an effective global baseline of investor-focussed standards; whether they are fit for purpose in helping financial markets accurately assess sustainability risks and opportunities; and whether they can form the basis for the development of a robust audit and assurance framework,” Mills said.
The ISSB’s proposals also come on the heels of recent efforts by regulators to establish climate reporting requirements, including last week’s proposals from the U.S. Securities and Exchange Commission (SEC), and the Canadian Securities Administrators’ (CSA) consultation, which closed earlier this year.
Assuming that IOSCO endorses the ISSB’s standards once they’re finalized, those standards would likely be incorporated into the local regulators’ efforts too.
“Endorsement by IOSCO can pave the way for adoption of the standards around the world, delivering much-needed consistency and comparability in sustainability-related information to the capital markets,” said Ashley Alder, chairman of the IOSCO board.
“These exposure drafts will help clear the way for corporates to accelerate progress towards disclosing complete, consistent and comparable information on sustainability matters, and we encourage all stakeholders to engage constructively with the ISSB during the consultation,” added Erik Thedéen, chair of IOSCO’s Sustainable Finance Task Force.
The head of the TCFD secretariat, Mary Schapiro, said that, “By building on the TCFD’s framework, the ISSB’s climate proposals will create further consistency, comparability and reliability across climate disclosure so investors can make more informed financial decisions. I welcome and support the ISSB’s work, which will bring further transparency on the financial impacts of climate change.”