Jurisdictions outside the E.U. are looking at ways to introduce new standards on sustainability disclosures, including Australia, Japan, Singapore and the UK, said Sue Lloyd, vice-chair of the International Sustainability Standards Board, in recent remarks at a banking conference in Germany. The standards have also received support within the E.U. and from key stakeholders.
Looking forward, the ISSB is analyzing stakeholder input on priorities for the next two years.
Lloyd gave remarks in a keynote address at the Brussels BdB (Association of German Banks) Courtyard Reception on August 30, 2023.
ISSB standards. As Lloyd explained, current sustainability disclosures are fragmented, inconsistent, and not tailored to the specific information needs of investors. IFRS S1 and S2, introduced in June, aim to enable a global baseline for decision-useful, consistent, comparable information that allows investors to understand risks and opportunities relating to sustainability.
IFRS S1 provides overarching general requirements standards applicable to all sustainability disclosures.
IFRS S2, designed to be used with IFRS S1, sets out specific climate-related disclosures. IFRS S2 requires specific information to be disclosed about physical risks, transition risks, and opportunities.
International support for standards. The ISSB standards have received strong support, said Lloyd.
- Australia, Japan, Singapore and the UK are looking at routes to introduce the ISSB Standards;
- Nigeria have publicly announced their intention to adopt the ISSB Standards early;
- The International Organization of Securities Commissions (IOSCO) has called on its 130 member jurisdictions to consider how they can incorporate the ISSB Standards into their respective regulatory frameworks;
- The Financial Stability Board announced that as a result of the ISSB standards, the work of the TCFD is complete, and they will transfer responsibilities for monitoring progress on climate-related disclosure to the IFRS Foundation; and
- The investor community internationally has indicated strong support.
Lloyd noted there are differences. The European standards include a focus on impact materiality—beyond the investor perspective—whereas the ISSB standards focus on information reasonably expected to influence investment decisions. However, the groups have worked together to improve the interoperability of climate-related disclosure requirements and core concepts.
Future priorities. The ISSB’s consultation on future priorities closed September 1, said Lloyd.
Stakeholders were asked to provide input on four potential projects: biodiversity, ecosystems and ecosystem services; human capital; human rights; and further integration in reporting.
Stakeholders were also asked to comment on the strategic direction and balance of the ISSB’s activities; the criteria for assessing which sustainability-related matters to prioritize—including topics, industries and activities; and the scope and structure of potential new research and standard-setting projects.
The ISSB is now analyzing this stakeholder input in developing the next two-year agenda, said Lloyd.