What you need to know about the ISSB’s proposal for a new standard

As the dust settles on the announcements from COP26 and the Glasgow Climate Pact, ISSB is one abbreviation that you need to know about. The ISSB – International Sustainability Standards Board – has potential to provide a universal gold standard for corporate sustainability reporting, encouraging accountability and transparency around the emission reduction pledges made by businesses.

ISSB is important because it will introduce a standard, which will reduce the amount of frameworks you need to consider, and merges an array of existing major international frameworks, including TCFD; CDSB; Integrated Reporting Framework; SASB Standards and WEF Stakeholder Capitalism Metrics. ISSB will be the sister of the International Accounting Standards Board (IASB) and both will be governed by the IFRS Foundation on equal terms. You need to take note of the new initiative, because ISSB and IASB will also work in close cooperation to establish connectivity between the standards via existing guiding principles of integrated reporting. The basis for the ISSB’s standards, which will be called IFRS Sustainability Disclosure Standards (IFRS SDS), will be drawn from the Task Force on Climate-related Financial Disclosures (TCFD). That means evaluating both the financial and non-financial resilience of the business to the impacts of climate change, which can impact on the financial values and liabilities.

Each individual jurisdiction will need to decide whether to make the use of the IFRS SDSs mandatory. As you know, similar decisions were made two decades ago, when the majority of countries around the world opted to use IFRS for their company reporting standards. While we cannot predict what reporting requirements will be adopted, the move to a ISSB’s standard is positive, as it allows for the greatest possible degree of consistency in sustainability reporting.

The plans announced in Glasgow included a public consultation this year. This will give stakeholders across the world an opportunity to provide feedback, both on the new board’s first proposed standards and on which items the ISSB should initially work on. This could include a focus on both thematic and industry-based requirements. Based on this plan, companies could be reporting their environmental performance in a comparable way from as early as 2023 – but more likely from 2024.

You could look at the current Climate-related Disclosure Prototype from the ISSB and compare their approach with your current internal reporting regulations and practises. Getting a head start could give your company a distinct advantage when it comes to reporting under the new standard.

Investing in sustainability is crucial if your company has not done so. If your company has, then consider developing connections between financial and sustainability teams in order to embed the company’s approach. 

There is a real opportunity for public listed companies to embrace this upcoming standard and act responsibly to help make the 1.5ºC target of the Paris Agreement achievable. 

We will keep you posted on the IBBS’s progress. Should you have any questions about the ISSB or the IFRS SDS, please get in touch with us for a discussion!