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Establishment of the International Sustainability Standards Board announced

David Baur Director and Leader Accounting Consulting Services, PwC Switzerland Nov 18, 2021

What is the issue?

The establishment of the ISSB was eagerly awaited. Companies and stakeholders have struggled with the myriad of sustainability standards, frameworks and metrics, often referred to as the ‘alphabet soup’.

The issuance of the ISSB standards in 2022 will provide the foundation for global, consistent, comparable and high quality environmental, social and governance (ESG) reporting standards.

The consolidation of the CDSB and the VRF (including the Integrated Reporting Framework and the SASB standards) into the Board by June 2022 strengthens the impact of the new proposed standards. This strategic convergence will enable the ISSB to leverage existing standards.

Two prototype standards have been published:

  • The first provides guidance on the disclosure of material information and a hierarchy of the guidance to be used if an ISSB Standard is not yet in place for a material ESG topic. It is based on the four pillars used in the recommendations by the Task Force for Climate-related Financial Disclosures (TCFD): Governance, Strategy, Risk Management, and Metrics and Targets.
  • The second provides guidance on climate reporting, which will establish narrative-based disclosures linked to the same four pillars referred to above, and cross-industry metrics, including greenhouse gas (GHG) emissions.

With the work already performed by the Technical Readiness Working Group (TRWG) on these prototypes, the new Board will be able to move quickly to reach their goal of publishing the first climate standard in the second half of 2022.

When issued, the ISSB’s standards will make a significant step in responding to investors' needs for sustainability information for them to assess enterprise value and make investment decisions.

What is the impact and for whom?

Some companies are already reporting under one of the sustainability reporting standards issued by existing bodies. Both the presentation and climate prototype standards are based on the TCFD recommendations. It is hoped that the move to the new standards, for those currently using or looking to move to TCFD, should be relatively smooth. For those using other standards, the move may be more complex.

The ISSB standards are expected to be the global baseline for sustainability reporting. Depending on local jurisdictions, there could be additional requirements built on this baseline. These could potentially be very significant for companies, hence it is important for them to engage with the ISSB as they look for comments on the proposed standards. At the same time they will need to evaluate the impact of these standards on their corporate reporting.

Find more information here:

ISSB Briefing Deck


 

Key points

On Wednesday 3 November 2021 the IFRS Foundation announced:

  • the establishment of the International Sustainability Standards Board (ISSB);
  • the consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF) into the ISSB; and
  • the publication of two prototype standards: one on climate-related disclosures, and the other on general sustainability disclosure requirements.

Contact us

David Baur

David Baur

Director and Leader Accounting Consulting Services, PwC Switzerland

Tel: +41 58 792 26 54

Robel Ghebressilasie

Robel Ghebressilasie

Senior Manager, Accounting Consulting Services, PwC Switzerland

Tel: +41 58 792 28 79