ISSB announces goal to harmonize sustainability reporting landscape and develop key partnerships

On June 24, 2024, the International Sustainability Standards Board (ISSB) announced a series of strategic partnerships that will guide its next two-year work plan.

Background of the ISSB

The IFRS Foundation established the ISSB in 2021 at COP26, with the primary objective of developing a global foundation of sustainability disclosure standards. In pursuit of this goal, the ISSB published its first IFRS sustainability disclosure standards in June 2023: IFRS S1 General Requirements and IFRS S2 Climate-related Disclosures.For more information on the inaugural IFRS S1 and IFRS S2 standards, see this Latham Client Alert.

The standards have received international support since their publication, including from notable organisations such as IOSCO and the Financial Stability Board, as well as a number of jurisdictions around the world that have announced that they are actively considering adoption roadmaps and potential pathways to mandatory implementation of the ISSB standards.See here for a list of ongoing and completed jurisdictional consultations.

The ISSB has set itself the goal of reducing the complexity of the sustainability information landscape while building on the established expertise of market-leading frameworks and standards. To this end, the ISSB has announced its intention to continue harmonizing and consolidating the information landscape over the next two years.

Summary of strategic relationships

Transition Plan Working Group

The ISSB will take responsibility for the disclosure-specific documents developed by the Transition Plan Working Group (TPT). The TPT, which was established at COP26 and includes representatives from regulators and industry, launched its disclosure framework in October 2023.For more information on the TPT disclosure framework, see this blog post from Latham.

These materials will be hosted on the IFRS Sustainability Knowledge Hub and used to develop educational resources tailored for global applicability. This initiative aims to streamline and consolidate the disclosure frameworks for transition plans, aligning with IFRS S2’s focus on climate-related risks and opportunities.

GHG Protocol

To ensure compatibility and meet the needs of the financial markets, the ISSB and the GHG Protocol have signed a Memorandum of Understanding to guide future work and collaboration.For more information, see the GHG Protocol press release on their partnership with the IFRS Foundation. This agreement includes governance arrangements and the appointment of an ISSB representative as an observer on the GHG Protocol Independent Standards Board. This collaboration ensures that GHG emissions are measured consistently, as required by IFRS S2.

CDP

CDP, which is one of several global climate disclosure standards, has confirmed that the CDP 2024 questionnaire is aligned with IFRS S2 as the baseline for CDP climate disclosure.

Global Reporting Initiative

The ISSB and the Global Sustainability Standards Board of the Global Reporting Initiative are committed to harmonizing common information to meet the needs of investors and a broader range of stakeholders. This collaboration aims to create a transparent global sustainability reporting system.

Working Group on Nature-Related Financial Disclosures

The ISSB will take into account the recommendations of the Working Group on Nature-related Financial Disclosures as part of its research project on biodiversity, ecosystems and ecosystem services. The ISSB initiative aims to address investors’ information needs regarding nature-related financial disclosures.

Latham & Watkins will continue to monitor the work of the ISSB and the development of ESG reporting standards globally.