ISSB rolls out sustainability reporting rules
A new set of global rules, backed by the G20, will put increased pressure on companies to disclose how climate change impacts their businesses. The International Sustainability Standards Board (ISSB) published these norms to assist regulators in cracking down on greenwashing, as trillions of dollars are being invested in environmentally and socially responsible ventures.
A new set of global rules, backed by the G20, will put increased pressure on companies to disclose how climate change impacts their businesses. The International Sustainability Standards Board (ISSB) published these norms to assist regulators in cracking down on greenwashing, as trillions of dollars are being invested in environmentally and socially responsible ventures.
Although it will be up to individual countries to decide whether to mandate listed companies to apply these standards, several nations, including Canada, Britain, Japan, and Singapore, are considering their adoption. The standards, which can be used for annual reports starting in 2024, expand upon the voluntary guidelines set by the G20’s Task Force on Climate-related Financial Disclosures.
The ISSB operates under the International Financial Reporting Standards foundation, while the International Organization of Securities Commissions (IOSCO) is expected to endorse the new standards. The aim is to enhance sustainability reporting, aligning it more closely with financial reporting. These regulations seek to address the current lack of comprehensive data, with around 42% of the world’s top 4,000 companies not providing information on Scope 1 and 2 carbon emissions. Under the ISSB rules, companies will be required to disclose significant emissions, which will be verified by external auditors.
The European Union is also finalizing its own disclosure rules, and efforts are being made to ensure interoperability between the EU and ISSB norms to prevent duplication.
The ISSB places specific emphasis on detailed emissions disclosures from banks concerning sectors such as oil and gas. Both the ISSB and the EU are expected to issue guidance on avoiding duplicative requirements in the near future.
