The International Sustainability Standards Board (ISSB), part of the IFRS Foundation, has announced significant steps to unify global sustainability reporting requirements. This latest initiative, part of the ISSB’s new two-year work plan, focuses on improving corporate climate transition disclosures and measuring greenhouse gas (GHG) emissions across the value chain.
Integration of Transition Taskforce Framework
Under this initiative, the ISSB will take over the Transition Taskforce (TPT) disclosure framework and has signed an agreement with the GHG Protocol. This partnership aims to align the GHG reporting standards of both organizations.
Background and Objectives of the ISSB
The ISSB was established in November 2021 during the COP26 climate conference to create IFRS Sustainability Disclosure Standards. This move responds to calls from investors, companies, and regulators for a consistent global baseline to understand sustainability risks and opportunities.
One of the ISSB’s primary objectives has been to reduce the complexity of existing sustainability reporting initiatives. The board has previously integrated the Climate Disclosure Standards Board (CDSB), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB) and assumed oversight of climate-related disclosures from the Financial Stability Board’s (FSB) ACFR.
Release of New Sustainability Standards
The ISSB’s inaugural standards for general sustainability (IFRS S1) and climate (IFRS S2) were released last year. The board’s recent consultation on its priorities has revealed a focus on enhancing the connectivity between IFRS sustainability and financial disclosure standards, promoting interoperability with other sustainability standards, and advancing new research and standard-setting projects.
Transition Plan Taskforce and TPT Disclosure Framework
The Transition Plan Taskforce, announced at COP26 and officially launched in April 2022, introduced the TPT Disclosure Framework in October 2023. This framework provides a “gold standard” for companies to develop and report on their climate transition plans. The ISSB’s acquisition of the TPT’s materials aims to support the implementation of IFRS S2 and reduce fragmentation in market information. These resources will be available on the IFRS Sustainability Knowledge Hub, where they will be used to develop educational materials and potentially enhance IFRS S2’s application guidance.
Amanda Blanc, Group CEO of Aviva and Co-Chair of the Transition Plan Taskforce, praised the move, stating, “The ISSB’s use of the Transition Plan Taskforce resources is a significant step toward achieving greater consistency and clarity in transition planning.”
Collaboration with the GHG Protocol
Additionally, the IFRS Foundation and the GHG Protocol have agreed to coordinate on GHG reporting standards. The IFRS Foundation will participate in updates and decisions related to the GHG Protocol, with an ISSB representative joining the GHG Protocol Independent Standards Board as an observer.
Professor Alexander Bassen, Chair of the GHG Protocol Independent Standards Board, highlighted the importance of this collaboration, noting, “This coordination will greatly benefit companies in measuring, managing, and reporting GHG emissions and will enhance the GHG Protocol’s standards update process.”
Why This Matters for Your ESG Strategy
For companies committed to environmental, social, and governance (ESG) principles, these developments are crucial. The harmonization of sustainability reporting standards means reduced complexity and enhanced clarity, which can streamline ESG strategy implementation and communication. With the ISSB’s integration of the TPT’s framework and its alignment with the GHG Protocol, companies will benefit from more consistent and reliable guidelines for reporting on climate transition plans and GHG emissions. This is particularly important as stakeholders increasingly demand transparency and comparability in sustainability disclosures.
Moreover, the ISSB’s efforts to align sustainability and financial reporting standards can help companies better integrate ESG factors into their financial planning and risk management processes. By adhering to these new standards, organizations can improve their credibility with investors and other stakeholders, potentially leading to better access to capital and enhanced competitive positioning in a market that values robust ESG practices.
Broader Efforts to Harmonize Sustainability Reporting
These latest developments are part of the ISSB’s broader efforts to harmonize sustainability reporting, including recent alignments with CDP and GRI, and a commitment to exploring the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations.
ISSB Chair Emmanuel Faber concluded, “As we embark on our new work plan, I appreciate our partners’ dedication to creating an efficient and effective sustainability disclosure system for capital markets.”
Conclusion
The ISSB’s new focus on transition planning and GHG emissions measurement, in collaboration with the GHG Protocol and the Transition Taskforce, marks a significant step towards harmonizing global sustainability reporting standards. These initiatives will simplify the reporting process, enhance transparency, and improve the credibility of sustainability disclosures. For companies committed to ESG principles, aligning with these standards can lead to better integration of ESG factors into financial planning, improved stakeholder trust, and potentially greater access to capital.
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