ISSB Moves to Standardize Reporting on Climate Transition Plans, GHG Emissions

The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced today a series of moves aimed at harmonizing sustainability reporting requirements for companies, with a focus on areas including disclosure of corporate climate transition plans and the measurement of greenhouse gas (GHG) emissions across the value chain.

Under the new initiative, forming part of the ISSB’s new two-year work plan, the ISSB announced that the IFRS Foundation will assume responsibility for the Transition Task Force disclosure framework, and that it has signed an agreement with the GHG Protocol aimed at ensuring compatibility between the organizations’ GHG reporting standards.

The ISSB was launched in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements enabling a consistent understanding of the effect of sustainability risks and opportunities on companies’ prospects.

One of the key goals of the ISSB was to enable a reduction in the complexity of multiple sources of sustainability reporting initiatives. At launch, the ISSB consolidated the Climate Disclosure Standards Board (CDSB), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB), and last year, the IFRS Foundation announced that it would take over responsibility for monitoring progress of companies’ climate-related disclosures from the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD).

The ISSB released its inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards last year, and subsequently launched a consultation on its priorities for its next two-year work plan, with the board recently revealing that its upcoming activities will prioritize activities including pursuing connectivity between the IFRS’ sustainability and financial disclosure standards and interoperability between its sustainability standards and others, in addition to beginning new research and standard-setting projects, supporting the implementation of IFRS S1 and IFRS S2, enhancing the industry-specific SASB standards, and engaging with stakeholders.

The formation of the Transition Plan Taskforce (TPT) was also announced at COP26 by then-Chancellor of the Exchequer, and now UK Prime Minister, Rishi Sunak, and officially launched in April 2022. The taskforce released its TPT Disclosure Framework in October 2023, aimed at providing a “gold standard” for companies to develop and report on their climate transition plans.

According to the ISSB, the IFRS Foundation takeover of the TPT’s disclosure-specific materials comes as a growing proportion of corporate climate-related disclosures include reporting on targets to transition to a lower-carbon economy, with the move aimed at supporting the application of these disclosures – including IFRS S2’s requirement of the disclosure of information if an entity has a transition plan – and at reducing fragmentation in information provided in the market. The materials will now be housed on the IFRS Sustainability Knowledge Hub, with the IFRS Foundation aiming to use them in the near term to develop educational materials and deliver compatibility with IFRS S2, and longer term as part of its efforts to consider the need to enhance the application guidance within IFRS S2.

Amanda Blanc, Group CEO of Aviva Group and Transition Plan Taskforce Co-Chair said:

“Companies developing and disclosing transition plans need clear and consistent guidance. Today’s announcement that the International Sustainability Standards Board will look to use the resources we have developed in the Transition Plan Taskforce is brilliant news and an important step towards greater consistency and clarity.”

The GHG Protocol establishes comprehensive global standardized frameworks to measure and manage GHG emissions from private and public sector operations, value chains and mitigation actions. Under the new agreement, the IFRS Foundation and GHG Protocol will put in place governance arrangements for the ISSB to engage in updates and decisions made in relation to the GHG Protocol standards and guidance, with an ISSB representative appointed as an observer on the GHG Protocol Independent Standards Board.

GHG Protocol Independent Standards Board Chair Professor Alexander Bassen said:

“This coordination between the IFRS Foundation and GHG Protocol is a momentous step in standardising GHG reporting globally. The deepening of the collaboration between the two parties will be a great benefit to companies seeking to measure, manage and report on their GHG emissions, and close collaboration with the IFRS Foundation will be invaluable to GHG Protocol’s standards update process for the suite of corporate standards.”

The new announcements form the latest in a series of moves by the ISSB aimed at harmonizing sustainability reporting, including a recently announced alignments with CDP and the GRI, and an agreement to consider how to build upon the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD).

ISSB Chair Emmanuel Faber said:

“As we embark on our new two-year work plan that will see us strengthen and build out the global baseline of sustainability-related financial disclosures, I am grateful to our partners in the sustainability reporting landscape for their commitment to delivering an efficient, effective sustainability disclosure system for capital markets.”