The IFRS Foundation has announced the formation of an International Sustainability Standards Board (ISSB) to mark finance day at the COP26 climate summit in Glasgow.
The Foundation said that the ISSB will develop “a comprehensive global baseline of high-quality sustainability disclosure standards” under robust governance and public oversight.
It is hoped that this will make it easier for investors to make meaningful comparisons of corporate environmental credentials as they look to assess related opportunities and risks.
The Foundation also announced that it will consolidate the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation by June 2022 to create a global standard-setter for capital markets.
Moreover, a prototype of disclosure requirements will be introduced by the Technical Readiness Working Group, which was formed by the IFRS Foundation Trustees to undertake preparatory work for the ISSB.
These developments create the necessary institutional arrangements set out in the Foundation’s revised constitution, and lay the technical groundwork for global sustainability disclosure standards for financial markets.
“Sustainability, and particularly climate change, is the defining issue of our time,” said Erkki Liikanen, chair of the IFRS Foundation Trustees.
“To properly assess related opportunities and risks, investors require high-quality, transparent and globally comparable sustainability disclosures that are compatible with the financial statements.
“Establishing the ISSB and building on the innovation and expertise of the CDSB, the Value Reporting Foundation and others will provide the foundations to achieve this goal.”
Finance Ministers and central bank governors from 36 jurisdictions across six continents joined the UK in publicly welcoming the announcement of the establishment of the ISSB today.
This comes on the same day that chancellor Rishi Sunak set out plans for the UK to become the world’s first “net-zero aligned financial centre” as he welcomed “historic” climate commitments from private companies.
Under the proposals, there will be new requirements for financial institutions and listed companies to publish net-zero transition plans, with a science-based “gold standard” for transition plans to be drawn up by a new Transition Plan Taskforce.
Sunak also revealed that over 450 firms from 45 countries have committed to align £130trn – around 40% of the world’s financial assets – with the climate goals of Paris Agreement through the Glasgow Financial Alliance for Net Zero.
“This is an historic wall of capital for the net-zero transition around the world,” he said. “What matters now is action: to invest that capital in our low-carbon future.”
Image credit: iStock
Author: Chris Seekings