Insight & Analysis

Press release: COP27: ISSB closer to implementation of climate-related disclosure standards in 2023

Published: Nov 2022

8th November 2022 – Since the establishment of the International Sustainability Standards Board (ISSB) was announced at Glasgow’s COP26 the IFRS Foundation has delivered on its commitments to establish the board, consolidate the voluntary disclosure landscape, embed a global footprint, and consult on proposed standards with a view to set the foundations of the global baseline of sustainability-related financial disclosures.

Partnership Framework for capacity building

ISSB Chair, Emmanuel Faber, will take to the main stage at COP27 finance day to share details of the ISSB’s new Partnership Framework with more than 20 partner organisations. The framework is designed to support preparers, investors and other capital market stakeholders as they prepare to use IFRS Sustainability Disclosure Standards.

It is supported by public and private organisations from around the world, with day-one partners including ACCA; Brazilian Institute of Corporate Governance (IBGC); CDP; Deloitte; Environmental Resources Management (ERM); European Accounting Association; EY; Global Reporting Initiative (GRI); Global Steering Group for Impact Investment (GSGII); Group of Latin American Accounting Standard Setters (GLASS); International Corporate Governance Network (ICGN); International Federation of Accountants (IFAC); KPMG; Nigerian Ministry of Finance, Budget and National Planning; Pan African Federation of Accountants; PRI; PwC; UK Foreign, Commonwealth & Development Office (FCDO); UN Department of Economic and Social Affairs (UNDESA); United Nations Environment Programme-Finance Initiative (UNEP-FI); UN Sustainable Stock Exchanges Initiative; and the We Mean Business Coalition.

Achieving a truly global baseline necessitates a strong focus on supporting implementation across all economic settings so that all market participants can access its benefits. There is also a particular need to consider the specific circumstances of emerging and developing economies, and smaller entities, many of which operate within global value chains. ISSB Vice-Chair Jingdong Hua has been in Sharm El-Sheikh discussing with partners how the framework will enable capacity building among these stakeholders.

International cooperation with jurisdictions

The ISSB is working with the European Commission and EFRAG toward a shared objective to agree as soon as practicable a framework for maximising interoperability of their standards and aligning on key climate disclosures.

This comes as the ISSB engages with jurisdictions globally and regularly consults with IOSCO in preparation for potential IOSCO endorsement of its proposed standards. It is a signal of significant momentum around the world, as more jurisdictions undertake work to consider how to incorporate the ISSB’s standards into their domestic systems of reporting.

Continued alignment with key initiatives

Alignment is crucial to building a global baseline and reducing market fragmentation. CDP and the ISSB have today announced that CDP will incorporate the IFRS S2 Climate-related Disclosures [IFRS S2] requirements into its global environmental disclosure platform. The announcement means that CDP’s 17,000+ voluntary users will disclose data structured to IFRS S2 in the 2024 disclosure cycle.

CDP’s decision, a signal of their commitment to delivering robust environmental disclosure to the market, encourages the early adoption of IFRS S2 disclosures, thereby providing investors with the information they need sooner, and reducing the reporting burden on entities through an alignment of requirements.

Furthermore, this will act as an enabler of the Climate Data Steering Committee’s objective in launching a Net Zero Public Utility (NZDPU) to work towards the digitisation of core climate data.

Together, these announcements form a key milestone as the ISSB turns its attention from this foundational development to implementation preparation, as the ISSB plans to issue final Standards as early as possible in 2023.

Erkki Liikanen, Chair of the IFRS Foundation, said: “A lot can happen in 12 months. One year on from the announced establishment of the ISSB at COP26, the board is now fully operational and committed to issuing its first two standards for adoption in 2023 following extensive global consultation this year. This suite of announcements at COP27 enables us to deliver on our commitment, made in Glasgow, to provide the global financial markets with high-quality disclosures starting with climate.”

Speaking from the main stage at COP27, Emmanuel Faber, Chair of the ISSB, said: As we’ve heard from stakeholders here at COP27, the need for climate-related financial disclosures is increasingly urgent. We are working collaboratively towards the implementation of effective sustainability disclosures for capital markets, which will empower market participants with the right information to support better economic and investment decision making.

Jingdong Hua, ISSB Vice-Chair, said: “By making capacity building an integral part of ISSB’s mission, we are committed to working with partners global and local to ensure accelerated readiness for jurisdictions to adopt ISSB standards, especially in developing and emerging market countries.

Working together for implementation”

Jean-Paul Servais, IOSCO Chair and Chair of the IFRS Foundation Monitoring Board, stated: “Establishing a global baseline for corporate sustainability disclosures is a key ambition of IOSCO’s Workplan for Sustainable Finance, which aims to increase transparency and mitigate greenwashing in financial markets. We are pleased to see the strong momentum behind the ISSB toward this ambition since it was established last year. The review of the ISSB’s finalised standards for potential IOSCO endorsement will be a crucial step towards increased comparability in sustainability disclosure and we are fully supportive of the approach to capacity building through the Partnership Framework announced today. In this respect, IOSCO and the IFRS Foundation co-organised already ISSB-related capacity building addressed to securities regulators.”

Mary Schapiro, Climate Data Steering Committee chair, said: “I welcome ISSB and CDP working together to bring together expertise of key actors in climate standard development and disclosure capacity building, which will strongly complement the Climate Data Steering Committee leadership in driving access and consistency of climate data and the accelerated digitisation of disclosure.”

Paul Dickinson, Founder Chair at CDP, said: “As the only global environmental disclosure platform, with over 18,700 companies worth half of global market capitalisation disclosing in 2022, CDP is uniquely positioned to scale the early adoption of the ISSB’s climate standard across the global economy. This will be critical in boosting corporate action and accountability, providing financial markets, governments and regulators with clear, comparable data to inform their decision making.”

Alta Prinsloo, CEO, Pan African Federation of Accountants, said: “We support the ambition to achieving a consistent and comparable global baseline of sustainability disclosures. PAFA is committed to playing a role in making this a reality through supporting adoption. We are delighted to support this partnership framework, working with the ISSB and partners around the world to bring the benefits of effective disclosure to all.”

Zainab S Ahmed, Nigerian Minister of Finance Budget and National Planning, said: “The IFRS Foundation, through the ISSB, has recognised and responded to the strong international demand for a global baseline of sustainability-related disclosures for the capital markets, which we believe has the potential to attract investment and boost private sector development. But developing standards is just one step in the journey to ensuring capital markets have access to robust sustainability-related information. We look forward to working with the ISSB and partners to deliver strong advisory and capacity-building support necessary to bring the implementation of this global baseline to life.”

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