The International Sustainability Standards Board (ISSB) has decided that it will complement its package of transitional reliefs to support companies applying the ISSB’s first two Standards – S1 (general requirements) and S2 (climate).
The relief will enable companies to focus initial efforts on ensuring they meet investor information needs around climate change.
It means 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.
This means companies will be able to use their first year of reporting to get familiar with concepts and requirements within the ISSB Standards – undertaking important exercises to get their systems in place – using climate first, before reporting on other sustainability-related risks and opportunities.
For example, companies will be able to benefit from this transition relief, in tandem with the one-year relief from providing Scope 3 GHG emissions, to understand and map their value chain. This will enable them to prepare for reporting on other sustainability-related risks and opportunities that arise in their value chain.
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By GlobalDataInvestors have indicated that while they need consistent, comprehensive sustainability-related information across all risks and opportunities to inform their investment decision-making, the need for disclosures about climate-related risks and opportunities is the most urgent.
Companies will still need to apply S1 in the first year they use the ISSB Standards, to meet general disclosure requirements where they relate to climate. For example, S1 sets out the approach to materiality and requirements for connectivity of information with that in the financial statements, which are relevant to the disclosure of climate-related information.
On this, ISSB chair, Emmanuel Faber, 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.”
The ISSB’s S1 and S2 will be issued towards the end of Q2 2023, following extensive market feedback to inform their development.
In May 2023, the ISSB expects to consult on its future priorities for standard setting and will be seeking feedback on four projects – biodiversity, human capital, human rights and integration in reporting – to further understand standard-setting priorities.
