Stockholm (NordSIP) – As reported in NordSIP last week, the International Sustainability Standards Board (ISSB) is playing an increasingly important role in the consolidation of global sustainability-related reporting standards. Its newly published International Financial Reporting Standards (IFRS S1 and S2) were designed to be compatible with the Task Force on Climate-related Financial Disclosures (TCFD) guidelines. The Financial Stability Board (FSB), the international body behind the creation of the Task Force, has now recommended that the ISSB take over the oversight of companies’ TCFD compliant climate-related disclosures.
The TCFD has built up more than 4,000 supporters in over 100 jurisdictions since releasing its initial recommendations in 2017. The IFRS, which was formed at COP26 in Glasgow in November 2021, will take control of the TCFD project as it rolls out its new standards during 2024. The FSB sees the IFRS S1 and S2 standards as the culmination of the TCFD’s work.
ISSB Chair Emmanuel Faber said: “The TCFD has been a trailblazer in raising the practice and quality of climate-related disclosures, providing much-needed information to investors about climate-related risks and opportunities. The ISSB has built from and consolidated the market-leading investor-focused sustainability-reporting initiatives to deliver the ISSB Standards, with the TCFD recommendations at the heart of this. As such, the ISSB welcomes the FSB’s request to transfer the TCFD’s monitoring responsibilities to the ISSB from 2024 and the opportunity to build on TCFD’s legacy. This announcement provides yet further clarification of the so-called ‘alphabet soup’ of ESG initiatives for companies and investors.”
The interoperability of sustainability reporting standards developed independently in various jurisdictions around the globe has been a thorn in the side of the compliance departments of multinational companies. The attempts at standardisation and convergence will be welcomed and should ease the burden on companies while providing timely, accurate and comparable data for sustainable investors. TCFD reporting is gradually being mandated in G7 countries, which may encourage the rapid adoption of the guidelines around the world.