ISSB Announces Focus on Harmonising the Sustainability Reporting Landscape and Developing Key Partnerships
On 24 June 2024, the International Sustainability Standards Board (ISSB) announced a series of strategic partnerships that will guide its next two-year work plan.
Background to the ISSB
The IFRS Foundation established the ISSB in 2021 at COP26, with the key aim of developing a global baseline of sustainability disclosure standards. Further to that goal, in June 2023, the ISSB issued its inaugural IFRS Sustainability Disclosure Standards — IFRS S1 General Requirements and IFRS S2 Climate-related Disclosures.For more information on the inaugural standards IFRS S1 and IFRS S2, refer to this Latham Client Alert.
The standards have received international support since their release, including from notable organisations such as IOSCO and the Financial Stability Board, as well as a number of jurisdictions globally that have announced that they are actively considering adoption roadmaps and potential pathways to mandatory application of the ISSB standards.See here for a list of ongoing and completed jurisdictional consultations.
One of the ISSB’s focus areas is to reduce the complexity of the sustainability reporting landscape whilst building on the established expertise of market-leading frameworks and standards. To this extent, the ISSB has announced plans to deliver further harmonisation and consolidation of the disclosure landscape over the next two years.
Summary of Strategic Relationships
Transition Plan Taskforce
The ISSB will assume responsibility for the disclosure-specific materials developed by the Transition Plan Taskforce (TPT). The TPT — which was established at COP26 and includes representatives from regulators and industry — launched its Disclosure Framework in October 2023.For more information on the TPT Disclosure Framework, see this Latham blog post.
These materials will be housed on the IFRS Sustainability Knowledge Hub and used to develop educational resources tailored for global applicability. This initiative aims to streamline and consolidate frameworks for disclosures about transition plans, aligning with IFRS S2’s focus on climate-related risks and opportunities.
GHG Protocol
To ensure compatibility and meet the needs of capital markets, the ISSB and GHG Protocol signed a Memorandum of Understanding to guide future work and collaboration.For more information, see the GHG Protocol press release on their partnership with the IFRS Foundation. This agreement includes governance arrangements and the appointment of an ISSB representative as an observer on the GHG Protocol Independent Standards Board. The collaboration ensures that GHG emissions are measured consistently, as required by IFRS S2.
CDP
CDP, which is one of a number of global climate disclosure standards has confirmed that CDP’s 2024 questionnaire is aligned with IFRS S2 as the baseline for CDP’s climate disclosure.
Global Reporting Initiative
The ISSB and Global Reporting Initiative's Global Sustainability Standards Board have committed to aligning common disclosures to meet the needs of both investors and a broader range of stakeholders. This collaboration aims to create a seamless, global sustainability reporting system.
Taskforce on Nature-related Financial Disclosures
The ISSB will consider the recommendations of the Taskforce on Nature-related Financial Disclosures as it embarks on its research project on biodiversity, ecosystems, and ecosystem services. The ISSB’s initiative aims to meet the information needs of investors regarding nature-related financial disclosures.
Latham & Watkins will continue to monitor the work of the ISSB and the development of ESG reporting standards globally.