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July 6, 2023

Ten things to know about the first ISSB standards

The International Sustainability Standards Board (ISSB) has taken a significant step towards global sustainability reporting by introducing its first set of standards – welcoming a new era of sustainability-related disclosure in capital markets worldwide. These standards provide a consistent framework for companies and investors to disclose sustainability-related information in the capital markets and provide a common language to help facilitate better understanding, comparability, and decision-making. Here are ten important things to know about the first ISSB Standards.

1. Global Disclosure Standards: ISSB Standards offer a unified global baseline for sustainability disclosures in the capital markets. This means that companies and investors can adopt a common set of standards, with additional jurisdictional requirements built upon this global baseline.

2.International Support: The ISSB’s work has gained strong support from stakeholders worldwide, including investors, companies, policy makers, and market regulators. Key organisations endorsing the ISSB include the International Organisation of Securities Commissions (IOSCO), the Financial Stability Board, the G20, and the G7 Leaders.

3. Disclosure of Decision-Useful, Material Information: The ISSB Standards focus on material, proportionate, and decision-useful information for investors. By initially concentrating on climate-related disclosures, companies can gradually integrate sustainability reporting into their overall disclosure practices.

4. Building on Existing Initiatives: The ISSB Standards consolidate and build upon existing sustainability reporting frameworks such as the TCFD Recommendations, CDSB Framework, SASB Standards and Integrated Reporting Framework. This approach ensures that companies can leverage their prior efforts and align with globally recognized reporting standards.

5. Reducing Duplicative Reporting: The baseline approach of ISSB Standards promotes global comparability in financial markets, while allowing jurisdictions to implement additional requirements to meet public policy or stakeholder needs. This helps minimise duplicative reporting obligations for companies operating in multiple jurisdictions.

6. Cost-Effective Worldwide Communication: ISSB Standards are designed to provide reliable information to investors, enabling companies to effectively communicate how they identify and manage sustainability-related risks and opportunities across different time horizons.

7. Connections with Financial Statements: ISSB Standards require sustainability-related information to be disclosed alongside financial statements. These standards are designed to complement existing accounting requirements, building upon the concepts underlying International Financial Reporting Standards (IFRS) already adopted by over 140 jurisdictions.

8. Rigorous Consultation Process: The development of ISSB Standards follows an inclusive and transparent due process, similar to the approach used for IFRS Accounting Standards. The ISSB engages in extensive consultations, with more than 1,400 responses received during the development of these standards. All relevant papers, feedback, and technical decision-making are publicly available.

9. Interoperability with Broader Sustainability Reporting: The ISSB collaborates with the Global Reporting Initiative (GRI) to ensure compatibility with GRI standards. This interoperability helps reduce the reporting burden for companies that utilise both ISSB and GRI Standards for their sustainability reporting.

10. Partnership for Capacity Building: The ISSB’s responsibilities extend beyond standard setting. At COP27, the ISSB announced plans for a capacity-building partnership program aimed at fostering high-quality, consistent reporting across developed and emerging economies.

Source of top 10: www.ifrs.org

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