At COP26, the IFRS Foundation announced it will work with jurisdictions globally to deliver a ‘comprehensive global baseline’ of sustainability disclosures for the capital markets, through the establishment of the International Sustainability Standards Board (ISSB).
The announcement was in response to demand from market participants, and requests from the G7 and G20, to assist in addressing the complex and fragmented sustainability disclosure landscape.
The ISSB is focused on developing standards that can provide a common language for sustainability information, to enable comparable and consistent sustainability disclosures across global capital markets.
The ISSB is working with jurisdictions around the world, as well as market participants, to deliver this.
Through this global shared endeavour, IFRS Sustainability Disclosure Standards can provide the foundations for globally applicable disclosure requirements, thereby establishing a consistent and comprehensive global baseline.
This includes working closely with the International Organization of Securities Commissions (IOSCO) as it evaluates whether to endorse IFRS Sustainability Disclosure Standards.
The ISSB’s global baseline will be developed to provide the information that is material to investors globally. However, jurisdictions are able to require local market participants to disclose further information, by adding their own additional ‘building blocks’ to these global foundations, tailored to the information needs that jurisdiction deems necessary. Additional disclosures can be required as long as that information is presented in a way that does not obscure the global baseline.
These local building blocks could be focused on disclosures that go beyond the remit of the IFRS Foundation, which is to meet the information needs of investors and capital markets. Or it could include jurisdiction-specific information relevant to investors.
The ISSB is establishing advisory and consultative bodies to serve as a platform for working with other international organisations, jurisdictional authorities and representatives of key stakeholders.
These bodies provide an essential mechanism to enable stakeholders to shape IFRS Sustainability Disclosure Standards, and to facilitate compatibility with any additional building blocks that jurisdictions develop to meet broader information needs.
The ISSB is working with local jurisdictions globally. The work of the ISSB has the support of the G20, along with Finance Ministers and Central Bank Governors from more than 40 jurisdictions on six continents who officially welcomed the IFRS Foundation’s goal to create a comprehensive global baseline of sustainability disclosures focused on meeting the needs of capital markets.
The ISSB has established a Jurisdictional Working Group made up of the Chinese Ministry of Finance, the European Commission, the European Financial Reporting Advisory Group, the Japanese Financial Services Authority, the Sustainability Standards Board of Japan, the UK Financial Conduct Authority and the United States Securities and Exchange Commission.
Furthermore, the ISSB is establishing the IFRS Sustainability Standards Advisory Forum, a group of nominated members from jurisdictional and regional authorities involved in sustainability-related reporting. Members will constructively contribute towards the achievement of the ISSB’s goal of developing standards that provide a comprehensive global baseline, ensuring two-way engagement between the ISSB and jurisdictions.