Consolidation and a flying start for sustainability standards: ISSB launched
This week in Glasgow, at COP26, the International Financial Reporting Standards (IFRS) Foundation announced the formation of the International Sustainability Standards Board (ISSB). Its task is to develop the IFRS Sustainability Disclosure Standards which will be comprehensive baseline global standards for sustainability reporting. We at XBRL International warmly welcome this development; there is every indication that the standards will be digital-first, designed around the need for decision-useful information and analysis.
“Sustainability, and in particular climate, is the defining issue of our time,” said Erkki Liikanen, Chair of the IFRS Foundation Trustees, making the announcement. “Capital markets can have an essential role to play in reaching net zero. But that can only happen when sustainability information is produced with the same rigour, assurance of quality and global comparability as financial information.”
This new effort builds on important work by many others, and there is no doubt that ongoing collaboration on a truly global basis will be key to success. Also announced were commitments from leading investor-focused sustainability disclosure organisations to consolidate into the new Board. The Value Reporting Foundation (home of both the SASB Standards and the Integrated Reporting Framework) and the Climate Disclosure Standards Board will be integrated into the ISSB by June 2022.
The IFRS Foundation has also released prototype climate and general sustainability disclosure requirements developed by the Technical Readiness Working Group (TRWG). This preparatory work, the result of months of collaboration by a number of organisations, is intended to help the ISSB to get off to a flying start and allow an initial set of draft climate standards to be finalised in 2022. The “good progress” on the climate prototype in particular was welcomed by the International Organization of Securities Commissions (IOSCO), whose Chairman Ashley Alder promised that “if the ISSB’s future standard meets IOSCO’s expectations, our endorsement will support all our 130 members in considering ways they might adopt, apply or be informed by the standard.”
In next steps, a Chair and Vice-Chair are close to being appointed. A search for additional board members will follow, as will public consultations on the ISSB’s work plan and current prototypes – so look out for these!
We are very pleased to see the ISSB pass the starting line, and look forward to rapid progress toward digital-focussed standards that can be used as a fundamental building block for sustainability reporting. Congratulations to the IFRS Foundation and all those involved!