The International Financial Reporting Standards Foundation (IFRS) has announced three significant developments at the UN-led global climate change summit, COP26. As part of the announcement, the IFRS introduced the formation of a new International Sustainability Standards Board (ISSB) which will consolidate both the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF).

The ISSB will be charged with developing a global baseline of sustainability disclosure standards that will give companies standardized rules for reporting on ESG data. This will allow investors to compare and value companies based on financial and sustainability performance data.

The IFRS has also published two sets of prototype standards covering climate and general disclosure requirements. These initial prototypes were developed alongside the Technical Readiness Working Group (TRWG) and will act as a framework for the ISSB to build upon as they work towards finalizing their first set of standards by the end of 2022.

OneTrust live – IFRS announce ISSB: Reaction & analysis

Fresh out of COP26, the IFRS announced the formation of a new International Sustainability Standards Board which will help create a global baseline for sustainability disclosure standards. OneTrust’s Phil Redman and Climatiq’s Philipp von Bieberstein discussed the announcement and offered insight into what this means for organizations and the future of sustainability.

What will the ISSB Standards mean for my organization?

The ISSB Standards signal a shift towards one global set of standards and away from the existing patchwork of reporting frameworks such as the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD). A global standard is expected to be widely welcomed in the ESG reporting space, however with several international bodies involved in their development, it will be important to observe whether new reporting guidelines will be strong enough to prevent ‘greenwashing’ and ‘creative accounting’.

The new standards will aim to reposition sustainability reporting as integral data for market valuations. Moreover, the consistency and transparency of a global reporting baseline will make ESG data more meaningful for stakeholders and will help to build more trust in sustainable markets.

Will the ISSB Standards apply to my organization?

The ISSB Standards will be considered for adoption on a voluntary basis by individual jurisdictions following a public consultation expected in the second half of 2022. However, in a statement made by the UK Government, the formation of the ISSB and subsequent development of a global baseline for reporting on ESG data has been welcomed by finance ministers and central bank governors from 37 jurisdictions.

Australia, Brazil, Canada, China, European Commission, France, Germany, Japan, New Zealand, Switzerland, the UK, and the USA are among those who have welcomed the announcement to date.

What is the timeline for the ISSB’s standards?

The IFRS made the announcement on November 3, 2021, at the COP26 summit in Glasgow and will look to have consolidated the CDSB and VRF into the ISSB by June 2022. The ISSB’s standards will be subject to a full public consultation following the formation of the ISSB with the expectation to accept their first standards by the end of 2022.

Conclusion:  A starting point to streamlined ESG reporting

ESG reporting is currently made up of disparate frameworks and standards with no broad regulations to address ESG issues. The new ISSB Standards will give organizations a solid starting point. However, evaluating what’s important, gathering data, and working across many different areas of an organization can be challenging. The OneTrust ESG Platform helps remove complexity, reduce manual processes, and accelerate the outcomes of your ESG and sustainability initiatives. Request a demo to learn more.