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ISSB delivers proposals to create comprehensive global sustainability disclosures

Key points:

  • Global sustainability-related reporting standards are a big step closer following the publication of the International Sustainability Standards Board’s (ISSB) Exposure Drafts on climate and general sustainability-related financial disclosures.
  • A4S welcomes the ISSB Exposure Drafts, another key milestone advancing work we started nearly two decades ago.
  • The Exposure Drafts will be available for consultation for the next 120 days (until 29th July).
  • They are based on the prototypes released last November, building on the TCFD recommendations and SASB industry-based disclosure requirements.
  • Key points emphasized within the Exposure Drafts include the need to consider impacts along the value chain, the application of the standards to sustainability-related topics beyond climate change, and more on transition plans and carbon offsets. It also includes specific metrics on financed emissions, relevant for companies in the financial services sector.
  • With over 30 governments around the world welcoming the ISSB’s formation, they look set to inform mandatory reporting requirements worldwide – active participation in their development is therefore strongly recommended.
  • We will be working with the global finance and accounting community to help inform responses to the consultation – contact us at info@a4s.org if you want to stay informed and hear about opportunities to get involved in the debate.


A4S welcomes the publication of the ISSB’s two proposed IFRS Sustainability Disclosure Standards. Without the right information along the full value chain, neither businesses nor investors will be able to invest in a sustainable future. This is an issue our Finance Leaders’ Sustainability Barometer highlighted, with the lack of reliable data cited as the biggest barrier to action. Adoption of a common set of global sustainability standards is key to resolving this issue, standards that the ISSB is well positioned to provide. We will be working with CFOs, accountants, pension funds and others to respond to the consultation and encourage businesses, investors and other stakeholders to engage.” – Jessica Fries, Executive Chairman, A4S


What is happening?

Without the right information available, decisions are made in the dark and act as a significant barrier to achieving net zero greenhouse gas emissions and wider sustainability goals. With the ISSB announcing the launch of their Exposure Drafts we have hit another milestone towards achieving global sustainability-related reporting standards.


What are the Exposure Drafts?

The ISSB have launched their Exposure Drafts on climate and general sustainability-related financial disclosures. These drafts present the first iteration of the proposed standards, which will now be made available for public consultation.

Protypes of the standards were released back in November 2021 which gave direction on the ISSB’s work. Now, the Exposure Drafts open the formal process of consultation, and the ISSB will receive responses which they will then have to consider as part of their due process.

The proposals aim to help companies report on all sustainability-related topics relevant to enterprise value, with additional detail provided on climate-related disclosures. The Exposure Drafts underline the need for organizations to consider impacts along the value chain and reinforce the fact that the impact an organization has on the world can often be enterprise-value relevant. This is consistent with the insights from our work with CFOs, investors and others. This also underlines the importance of the announcement between the ISSB and GRI to align capital market and multistakeholder standards.


What are the key changes relative to the prototypes?

The Exposure Drafts build on the TCFD and SASB industry standards. They take forward the prototypes initially released in November 2021. Changes to these prototypes include the following:

High level changes from General Requirements prototype:

  • Reinforcement of the definition of ‘enterprise value’ and objective of the requirements.
  • Alignment of the definition of ‘reporting entity’ with IASB’s definition.
  • Clarification on how reporters should approach the identification of risks and opportunities in the absence of the IFRS Sustainability Disclosure Standard addressing a specific sustainability-related topic.
  • Adoption of the wording ‘connected information’, reinforcing the need for connectivity with financial information.

High level changes from Climate-related Disclosures Requirements prototype:

  • Addition of requirements to improve clarity of information in relation to transition plans and carbon offsets.
  • Inclusion of methodologies to assess climate impacts and resilience alternative to scenario analysis, which remains the preferred approach.
  • Expansion of the requirements around Scope 1 and 2 greenhouse gas (GHG) emissions to be disclosed separately for consolidated accounting groups and associates, joint ventures, unconsolidated subsidiaries or affiliates.
  • Inclusion of specific metrics on financed emissions.


Why do we need new standards?

Standards have an important role to play in making sure that information is presented in a comparable and consistent way by different organizations, reducing the risk of greenwashing or a failure to report performance in a transparent way. Further, companies are part of global supply chains and investors are part of global capital markets. Consistency across jurisdictions is therefore key. It improves both the understandability of the information reported and the efficiency of disclosures.  


What is the ISSB?

In November 2021, during COP26, the IFRS Foundation announced the establishment of the International Sustainability Standards Board (ISSB). The ISSB aims to develop and maintain a global set of sustainability-related reporting standards. Importantly this will bring together already existing standards, with the Climate Disclosure Standards Board (CDSB) already merged into the ISSB and the Value Reporting Foundation (VRF) due to complete its merger with the ISSB in June. In addition, the IFRS Foundation and Global Reporting Initiative (GRI) have announced a collaboration agreement. Under this agreement their respective standard setting boards, the ISSB and the Global Sustainability Standards Board (GSSB), will seek to coordinate their work programmes and standard-setting activities.


What is next?

A4S responded to the IFRS Foundation’s earlier consultation on the establishment of the ISSB, and we plan to take part in this consultation on the ISSB’s Exposure Drafts. As part of this process, we will be working with our networks and will share our latest thinking on the proposals as we progress with our review of the drafts in the coming weeks.

Additionally, later this year the ISSB will undertake a further public consultation on its future standard-setting priorities. This will include seeking feedback on the sustainability-related information needs of investors when assessing enterprise value and on further development of industry-based requirements, building on the SASB standards that address a broad range of sustainability matters. Initial proposals for a digital taxonomy that captures the information required by the ISSB’s standards – the IFRS Sustainability Taxonomy – enabling tagging of a company’s sustainability disclosures will be published shortly.

The reporting news will be coming thick and fast over the next year, bringing multiple changes to the reporting landscape. In the EU, the Exposure Drafts on the European Sustainability Reporting Standards (ESRS) are also expected to be published for two conceptual guidelines in late Q2. In the US, the Securities and Exchange Commission has proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports.

Stay tuned to the A4S Newsletter, communications and events to stay up to date.

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