ISSB sees progress on climate standards adoption

The International Sustainability Standards Board reported progress on adoption of its climate-related disclosures by companies around the world.

The ISSB issued a progress report Tuesday indicating that more than 1,000 companies have referenced the board in their reports and 30 jurisdictions are making progress on introducing ISSB standards in their legal or regulatory frameworks. The International Financial Reporting Standards Foundation, which oversees the ISSB and the International Accounting Standards Board, presented the findings to the Financial Stability Board on Tuesday. The report also discusses the alignment of disclosures with the Task Force on Climate-related Financial Disclosures recommendations, which the IFRS Foundation took over responsibility for recording climate-related disclosure progress when the TCFD disbanded in 2023.

The release of the report comes amid the United Nations' COP29 climate change summit in Azerbaijan this week.

The report indicated that 82% of companies disclosed information in line with at least one of the 11 TCFD recommendations as companies around the world turn their attention to climate-related disclosures. However, less than 3% of these companies are reporting in line with all 11 TCFD recommended disclosures, so few companies offer disclosures covering the company's entire climate-related governance, strategy, risk management or metrics and targets. The report includes information about the status of the 30 jurisdictions that are progressing toward introducing ISSB standards in their regulatory frameworks, along with insights into how companies are transitioning from disclosures prepared using the TCFD recommendations to disclosures prepared using ISSB standards.

A separate analysis by the IFRS Foundation on some of the main features in these 30 jurisdictional frameworks found that jurisdictions see the value of Scope 3 greenhouse gas emissions disclosures. All 29 jurisdictions that have finalized or published proposals on climate-related disclosures have included Scope 3 GHG emissions disclosure requirements, with some allowing or proposing brief extensions of transitional reliefs to prepare for the requirements.

Jurisdictions also see the value of including industry-specific disclosure requirements, according to the analysis. Some 28 jurisdictions have included or are considering requirements for industry-specific disclosure. Only two of the 30 jurisdictions have signaled their intention to make industry-specific disclosure voluntary, at least initially.

"This progress report underscores the significant and encouraging progress in disclosure of climate-related information," said ISSB chair Emmanuel Faber in a statement. "But further action is needed to address the fact investors are still not receiving the information they need to assess and price appropriately climate and other sustainability-related risks and opportunities. Through jurisdictional initiatives and the voluntary choices companies are making, often in response to investor demand, we continue to see momentum build. The introduction of sustainability-related disclosure requirements into regulatory frameworks through the adoption or other use of ISSB standards, building on the strong foundations laid through the TCFD recommendations and progressing towards a more comprehensive and assurable set of requirements, is of vital importance for the healthy functioning of capital markets around the world."

The ISSB found that 90% of the jurisdictions have included or are considering requirements for disclosure covering all sustainability-related risks and opportunities over time. Some jurisdictions are initially focused on the disclosure of climate-related risks and opportunities.

In some cases, jurisdictions have moved closer to the ISSB standards compared to their initial proposals in response to calls from stakeholders for greater alignment with ISSB standards and to secure comparability of disclosures by adhering to the global baseline.

One important aspect of the introduction of ISSB standards into regulatory frameworks is that a number of jurisdictions intend to introduce industry-specific disclosure requirements for the first time. Many of those stem from the standards were originally produced by the Sustainability Accounting Standards Board, which was absorbed into the ISSB. The SASB standards provide an important component of the ISSB's global baseline of disclosures supporting high-quality implementation of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.

The Financial Stability Board also published its 2024 progress report on Achieving Consistent and Comparable Climate-related Disclosures on Tuesday, summarizing the main findings from the IFRS Foundation's report.