The International Sustainability Standards Board (ISSB) is a new global standard-setting body for sustainability disclosures. It was established in November 2021 by the International Financial Reporting Standards (IFRS) Foundation to create a globally recognized framework for companies to report on their sustainability-related risks and opportunities.
Key Objectives of the ISSB:
- Provide a consistent and comparable framework: The ISSB aims to create a single set of global sustainability reporting standards that will make it easier for investors to understand and compare the sustainability performance of companies across different jurisdictions.
- Enhance transparency and accountability: By requiring companies to disclose their sustainability-related information, the ISSB aims to increase transparency and accountability, leading to better decision-making by investors and other stakeholders.
- Promote sustainable finance: The ISSB believes that standardized sustainability reporting will help to direct capital towards companies that are committed to sustainability, thereby promoting sustainable finance.
How the ISSB Works:
The ISSB develops and issues sustainability reporting standards that are aligned with the IFRS Framework. These standards cover a wide range of sustainability topics, including:
- Climate change: Reporting on greenhouse gas emissions, climate-related risks and opportunities, and climate change mitigation and adaptation strategies.
- Environmental impact: Reporting on environmental impacts, resource use, and pollution.
- Social and governance issues: Reporting on labor practices, human rights, diversity and inclusion, and corporate governance.
Benefits of the ISSB:
- Increased investor confidence: Standardized reporting makes it easier for investors to understand and compare companies' sustainability performance, leading to increased confidence in their investment decisions.
- Reduced reporting burden: The ISSB aims to simplify and streamline sustainability reporting by providing a single set of global standards, reducing the burden on companies.
- Improved access to capital: Companies that demonstrate strong sustainability performance are likely to attract more investors and access capital at lower costs.
Examples of ISSB Standards:
- ISSB S1: General Requirements for Sustainability-Related Disclosures: This standard sets out the general principles and requirements for all sustainability-related disclosures.
- ISSB S2: Climate-Related Disclosures: This standard provides guidance on disclosing climate-related risks and opportunities, including greenhouse gas emissions, climate-related financial risks, and climate change strategies.
The ISSB is still in its early stages of development, but it has the potential to significantly impact the way companies report on their sustainability performance. As the ISSB continues to develop its standards, it is likely to have a major influence on the global sustainability reporting landscape.
