No Match Found
The area of non-financial ESG reporting has evolved rapidly, with the eagerly awaited first two ISSB EDs being released on 31 March 2022.
The two EDs that have been released are:
These are updates to the prototypes issued in November 2021, refining concepts and disclosure requirements. A summary of the prototypes and the formation of the ISSB are detailed in this article. A comparison to the initial prototypes has also been published, which might be useful for those who had previously analysed the prototype standards.
The ISSB EDs are based on the structure of the Task Force on Climate-related Financial Disclosures (TCFD) being governance, strategy, risk management, and metrics and targets, focusing on significant sustainability risks and opportunities. However, the disclosure requirements of the EDs extend beyond the 11 TCFD recommendations, including general sustainability disclosures as well as those relating to climate.
With responses due by 29 July 2022, stakeholders are encouraged to engage early to help shape the final standards.
Each country (or group of countries, where relevant) will need to determine whether ISSB standards should be adopted for local markets.
If adopted, the future standards set out in the proposed EDs are likely to have a significant impact, especially for those reporters who are yet to provide sustainability reports.
Disclosures covering general, thematic and industry-specific metrics will be required.
It is not clear when the requirements proposed in the EDs will apply, because the effective date will be determined when the standards are issued. However, the ability to apply earlier than any mandatory effective date, and relief from providing comparative information in the year of adoption, are proposed in the EDs.
As discussed above, local jurisdictions will need to determine whether to require adoption of the proposed ISSB standards and, as a result, might also set their own timeframe for adoption which differs from the proposals.
The ISSB will consider feedback to the EDs and consider whether changes are required prior to finalising those standards. Furthermore, we understand that the ISSB will consult, later in 2022, on standard-setting priorities, including seeking feedback on the needs of investors in assessing enterprise value and on further development of industry-based requirements.
The ISSB also announced plans to embed the industry-based approach used by the Sustainability Accounting Standards Board (SASB) into its standard-setting process. Ongoing projects by the SASB will be transitioned to the ISSB and continued. The ISSB has also stated that it actively encourages preparers and investors to continue to support and use the SASB standards in this transition phase.
The International Sustainability Standards Board (ISSB) has issued its first two exposure drafts (EDs) for comment.
Director and Leader Accounting Consulting Services, PwC Switzerland
Tel: +41 58 792 26 54
Senior Manager, Accounting Consulting Services, PwC Switzerland
Tel: +41 58 792 28 79