ISSB Prioritizes Climate Reporting and Defers Other Disclosures
On April 4, the International Sustainability Standards Board (ISSB) announced that companies that follow its standards will only be required to report on climate-related risks and opportunities in their first year of ISSB’s compliance; reporting on other sustainability issues can be deferred to the second year. According to the ISSB’s press release, “companies can prioritise putting in place reporting practices and structures to provide high-quality, decision-useful information about climate-related risks and opportunities in the first year of reporting using the ISSB Standards. Companies will then need to provide full reporting on sustainability-related risks and opportunities, beyond climate, from the second year.”
The ISSB has previously announced a one-year delay in the reporting of Scope 3 greenhouse gas emissions (e.g., GHG emissions in the company’s supply chain or resulting from use of the company's products). Accordingly, in their first year using the ISSB Standards, companies need not:
Provide disclosures about sustainability-related risks and opportunities beyond climate-related information.
Provide annual sustainability-related disclosures at the same time as the related financial statements.
Provide comparative information.
Disclose Scope 3 greenhouse gas emissions.
Use the Green House Gas Protocol to measure emissions, if they are currently using a different approach.
In February, the ISSB announced that it had approved in principle its first two standards – IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures). These standards will be finalized and issued by June 30 and will take effect in January 2024. See ISSB Agrees in Principle on its First Two Standards, February-March 2023 Update. ISSB standards (which incorporate the standards of the Sustainability Accounting Standards Board) are not mandatory in the United States, but may become de facto global standards, and many U.S. companies may follow them voluntarily.