Move represents a “major step forward in establishing consistent, comparable global reporting standards” - TCFD

The formation of a new International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs has been announced on Finance Day of COP26.

In his speech, Erkki Liikanen, Chair of the IFRS Foundation Trustees, explained that ISSB would “focus on meeting the sustainability information needs of investors for assessing enterprise value and making investment decisions.”

“Its standards will help investors understand how companies are responding to ESG issues, like climate, to inform capital allocation decisions.”

“The standards will form a comprehensive global baseline of sustainability disclosures. They can be used on a standalone basis or integrated into jurisdictional requirements to serve broader stakeholder or other public policy needs.”

The launch of the ISSB has come with a commitment by leading investor-focused sustainability disclosure organisations to consolidate into the new board.

Mary Schapiro, head of the TCFD Secretariat, added:

Development of the ISSB’s global baseline will deliver transformative change in sustainability disclosures for the financial markets.

The TCFD welcomes the formation of the ISSB, which builds upon the foundation of the globally accepted TCFD framework and the work of an alliance of sustainability standard setters. The ISSB represents a major step forward in establishing consistent, comparable global reporting standards.

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, said:

Creating long-term value requires both a focus on financial and sustainability performance. This means we need tools for measuring sustainability performance just as we have for financial performance.

The ISSB launch has been widely welcomed. “Without the right information, companies and investors struggle to make informed decisions and assess whether they are on track to achieve the reductions in greenhouse gas emissions necessary to keep global temperature rise below 1.5 degrees Celsius,” said Jessica Fries, executive chairman of A4S [Accounting for Sustainability].

“The IFRS Foundation’s proposed IFRS Sustainability Disclosure Standards, developed by the ISSB, has the potential to provide investors with the consistent information they need to evaluate an organisation’s performance, inclusive of social and environmental factors.”

To ensure successful adoption, further steps are now necessary, Fries added.

”It is critical that global standards are adopted across jurisdictions rather than just used to inform and influence jurisdictional standards – the latter would likely lead to fragmentation in reporting.”

“A number of governments have already indicated their intentions to implement the ISSB standard, including the UK, and more must come on board.”