It will enable companies to focus their initial efforts on making sure they meet climate change investor information standards.
The International Sustainability Standards Board (ISSB) resolved to expand its package of transitional reliefs to assist businesses applying for the ISSB's first two Standards, S1 (general standards) and S2 (climate), at its meeting earlier this month.
The reprieve will allow businesses to concentrate their early efforts on making sure they satisfy investor information requirements for climate change.
In the first year of reporting using the ISSB Standards, enterprises can prioritise putting reporting practices and structures in place to offer high-quality, decision-useful information about climate-related risks and opportunities.
From the second year, businesses will be required to offer comprehensive reporting on sustainability-related risks and opportunities, beyond climate.
This means that businesses can use the first year of reporting to familiarise themselves with the ideas and specifications contained in the ISSB Standards—undertaking crucial exercises to set up their systems—using climate first, before reporting on other sustainability-related risks and opportunities.
For instance, businesses will be able to comprehend and map their value chain thanks to this transition respite and the one-year exemption from reporting Scope 3 GHG emissions. As a result, they will be able to get ready to report on any additional sustainability-related risks or opportunities that develop along their value chain.
Investors have stated that while they require consistent, thorough disclosures of sustainability-related risks and opportunities across all hazards and opportunities to guide their investment decision-making, the disclosure of risks and opportunities related to climate change is the most essential.
The whole package of reliefs means when businesses during the first year use the ISSB Standards; they do not have to besides climate-related information, disclose sustainability-related risks and opportunities; publish yearly sustainability-related disclosures concurrently with associated financial results; providing comparable data;
If they are currently using a different method, they must apply the Green House Gas Protocol to monitor emissions and declare Scope 3 greenhouse gas emissions.
The ISSB also resolved to exempt enterprises from giving comparative information if they solely report on climate-related risks and opportunities in the first year. This indicates that, in their second year of reporting, they are not required to give comparative information on their sustainability-related risks and opportunities outside climate.
The ISSB also decided to exempt enterprises from giving comparative information if they solely report on climate-related risks and opportunities in the first year. This indicates that, in their second year of reporting, they are not required to give comparative information on their sustainability-related risks and opportunities outside climate.
Emmanuel Faber, Chair of the ISSB, said, “The upcoming introduction of the ISSB’s Standards establishing the global baseline is being welcomed by companies urgently looking for tools to meet the information needs of their investors. This transitional relief ensures companies can phase in their approach, initially focusing on the quality of the climate-related information they provide. That said, companies around the world are not all starting from the same place. We expect many of the companies that already disclose information beyond climate to continue to do so, including the 2,500 plus companies already applying the SASB Standards.”
Near the end of Q2 2023, the ISSB's S1 and S2 will be released after receiving substantial market feedback to guide their development.
The ISSB anticipates holding a consultation on its future standard-setting priorities in May 2023 and will be looking for input on four projects—biodiversity, human capital, human rights, and integration in reporting—to better understand these goals.