The IFRS Foundation has disclosed significant information regarding the formation of a new International Sustainability Standards Board (ISSB), its constituent organisations alongside the creation of the Technical Readiness Working Group (TRWG) and the publication of two disclosure requirement prototypes.
The aim of the International Sustainability Standards Board (ISSB) is to develop a comprehensive global baseline for high-quality sustainability disclosure standards. The ISSB will develop the IFRS Sustainability Disclosure Standards, which will be specifically prepared to ensure compatibility between different jurisdictions and wider stakeholder group expectations.
In this effort, the IFRS Foundation will be consolidating with the CDSB (Carbon Disclosure Project initiative) as well as the VRF (which consists of the Integrated Reporting Framework and SASB Standards). This consolidation is expected to finalise in June 2022.
The IFRS Foundation has created the Technical Readiness Working Group (TRWG) which is the main body for providing recommendations to the ISSB in its development of the global standard. The TRWG consists of members from the CDSB, IASB, TCFD, VRF and the World Economic Forum.
Alongside the announcement of the ISSB, the Technical Readiness Working Group (TRWG) has released two disclosure requirement prototypes. The first is concerned with General Disclosure Requirements while the second is specifically focused on Climate-related Disclosure Requirements.
The General Requirements Prototype emphasises focus on the materiality of sustainability-related financial information. For the time being, the ISSB proposes this prototype to be used alongside existing reporting standards to support topics which are not yet fully covered by the ISSB
The Climate-related Disclosures Prototype is predominately built on TCFD recommendations and is meant to allow users to assess:
Governance: the existing processes, control and procedures used to assess and manage climate-related risks and opportunities
Strategy: how the company deals with climate-related risks and opportunities which could impact the business model and strategy over the short, medium, and long term. The current and anticipated effects of climate-related risks as well as the impact on financial position.
Metrics and targets: the metrics and targets used to manage and monitor company performance in relation to climate-related risks and opportunities over time.
We welcome this announcement with open arms as we have been acutely aware of the high demand, from both stakeholders and companies, for an international standardised reporting standard. This is even more relevant for non-financial disclosure, with specific focus on climate.
The release of two disclosure prototypes alongside the fact that the ISSB will be looking to earnestly begin operations in the first half of 2022, suggests a fast and directed pace for the development of this new IFRS sustainability standard.
Zebra is currently closely monitoring the fast-paced development of this announcement and we will be looking forward to sharing more details as they become available.