ISSB disclosure rule update expected in 2023
January 6, 2022
The International Sustainability Standards Board (ISSB) is to propose two new rules covering companies’ disclosures of climate-related risks and expands its focus to include corporate biodiversity reporting.
The pairing will help set a baseline for disclosures by more broadly incorporating nature, the ISSB said.
The first rule will centre on companies disclosing climate-related risks such as extreme weather events, while the second would require companies to share details on how they monitor and assess a range of sustainability risks.
The ISSB said its work will build on the efforts of the Taskforce for Nature-related Financial Disclosure (TNFD) and other existing nature-related standards and disclosures.
The proposals come after more than a hundred companies issued responses to the proposals over the summer. More than 80 chief financial officers wrote to the ISSB to call for greater alignment in global sustainability standards and for an uptick in the amount of accessible data beyond that “impacting enterprise value”.
“Understanding the impact an entity’s activities has on wider society is just as important as understanding the risks and opportunities affecting the entity’s enterprise value,” said Russell Picot, chair, HSBC Bank Pension Trust and co-chair, A4S Asset Owners Network.
“As users of sustainability data, we must ask the ISSB to enhance the proposed global standards and deliver a watershed moment on decision-useful, sustainability data,” he added.
Finance chiefs also raised concerns about how the upcoming rules would interact with upcoming SEC proposals surrounding disclosures.
At December’s meeting, the ISSB also updated its current working definition of the term ‘sustainability.
Its agreed definition is now: “the ability for a company to sustainably maintain resources and relationships with and manage its dependencies and impacts within its whole business ecosystem over the short, medium, and long term”.
The description is designed to provide more context for companies making materiality assessments. But the ISSB’s focus remains on single, rather than double, materiality.
In 2023, the ISSB will also investigate potential new disclosures around the impact of businesses on biodiversity, human capital and reporting on human rights within companies.
This month, the ISSB set out plans to open a new Beijing office by mid-2023.Last Updated: 6 January 2023