Representatives of the ISSB are attending the COP27 conference in Sharm El-Sheikh and have used this forum to make a number of announcements including the:

• incorporation of the future IFRS S2 Climate-related Disclosures standard into CDP’s global environmental disclosure platform;
• establishment of a partnership framework to help prepares, investors and stakeholders with the use of its future sustainability standards;
• adoption by the Financial Reporting Council of Nigeria of the future sustainability disclosure standards.

Currently the ISSB is redeliberating its first two proposed sustainability standards IFRS S1 General Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures, following the conclusion of the consultation period on their draft versions.

The partnership framework as well as disclosure platform inclusion are practical steps, laying the groundwork required for the actual implementation of the sustainability standards following their formal issuance by the ISSB, which is likely to happen in the very near future.

Both the SEC in the US and EFRAG in Europe are engaged in similar work around climate change information disclosures.

The SEC’s  proposed rule very firmly focuses on climate-related risks and emissions and offers an exemption from Scope 3 emissions disclosure requirements as well as safe harbor provisions for liability for these for smaller companies.  

Draft standards

EFRAG’s draft ESRS standards package includes 11 draft standards including a standard setting out general principles as well as cross-cutting disclosure requirements. Interestingly the standards are split into five focusing specifically on environmental disclosures and four focusing entirely on social disclosures.

The ISSB indicates that it is engaging with the European Commission and EFRAG around maximising the interoperability of standards as well as alignment on key climate disclosures. However, the equivocal language of the ISSB’s announcement suggests that such an agreement, if forthcoming, might take both some negotiating effort and time.

Although the ISSB indicates that it is engaging with “jurisdictions globally” there is no indication of similar alignment efforts with the US and SEC. What seems likely is a future sustainability disclosure landscape that is analogous to that of financial reporting currently – with separate standards established and required for companies based in the United States.