ISSB Standards, IOSCO endorsement 2023

ISSB Standards: IOSCO announces formal endorsement

On 27 July, the International Sustainability Standards Board (ISSB) has released the Proposed IFRS Sustainability Disclosure Taxonomy for public comment. These proposals reflect the disclosure requirements arising from the ISSB's initial two Standards—IFRS S1 and IFRS S2:

  • IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, issued in June 2023; and

  • IFRS S2 Climate-related Disclosures, issued in June 2023.

These standards, both issued last month following an 18-month consultation period, set a comprehensive global baseline for disclosing sustainability-related financial information to meet the needs of users of general financial reports.

Digital Taxonomy to facilitate digital consumption of sustainability-related financial disclosures

The digital taxonomy is aimed at enabling structured digital reporting of sustainability-related financial data, adhering to the ISSB Standards. The digital taxonomy is designed to make it easier for investors to access, extract, compare and analyse sustainability information provided by companies.

Throughout the development of IFRS S1 and IFRS S2, the ISSB has been concurrently working on its digital taxonomy to make sustainability-related financial disclosures readily consumable in a digital format once the ISSB Standards are implemented.

“Investors increasingly consume information digitally, therefore it’s important that we facilitate digital consumption of sustainability-related financial information,” said ISSB chair Emmanuel Faber. “Our proposed digital taxonomy is designed to make it easier for investors to extract, compare and analyse the information companies provide,” he added.

The IFRS Sustainability Disclosure Taxonomy is expected to play a role similar to the IFRS Accounting Taxonomy. It will enable digital tagging of the information required by the IFRS Standards, fostering efficiency and accuracy in data handling. However, it is essential to note that these taxonomies differ from those established by jurisdictions to categorize economic activities as environmentally sustainable.

The ISSB welcomes feedback on the Proposed Digital Taxonomy

The ISSB is seeking feedback on the proposals over a 60-day consultation period closing on 26 September 2023. The ISSB will review feedback on the proposals in the second half of 2023 and aims to issue the final digital taxonomy early in 2024, taking into account the input received from stakeholders.

IOSCO announces formal endorsement of ISSB Standards

The ISSB’s proposal was revealed to the public on 27 July, a mere two days following the formal endorsement of the ISSB standards by the International Organization of Securities Commissions (IOSCO). The IOSCO also called on regulators worldwide to consider the adoption of these standards within their respective jurisdictions “in a way that promotes consistent and comparable climate-related and other sustainability-related disclosures for investors.”

“After a detailed analysis, IOSCO has determined that the ISSB standards are appropriate to serve as a global framework for capital markets to develop the use of sustainability-related financial information in both capital raising and trading and to help globally integrated financial markets accurately assess relevant sustainability risks and opportunities,” IOSCO said in a statement on Tuesday, 25 July.

“This is a critical moment in advancing IOSCO’s goal of improving climate-risk disclosure for investors,” said IOSCO chair Jean-Paul Servais, announcing the endorsement. “Investors are demanding better information about sustainability risks and opportunities, and the G20, the G7, and the FSB [Financial Stability Board] rely on IOSCO to assess whether the ISSB Standards are fit for purpose for capital markets.”

IOSCO’s assessment report is published here.

Take the lead in adopting ISSB Standards 

Deeply understanding the place of sustainability disclosures among global challenges which are hindering the transition to a green economy and reaching sustainable development goals, at BR-AG we are pursuing the goal of building a common understanding of data requirements for sustainability disclosures across jurisdictions.

Bringing innovative digitization projects to life on both national and cross-national levels, we are supporting regulators and national competent authorities by conducting analysis and advising on the application and impact of global and EU sustainable finance-related initiatives, like ISSB Reporting Standards, on national regulatory frameworks, helping with the preparation of national competent authorities’ roadmaps to adopt new regulations and policies, development and maintenance of the related digital taxonomies and the comprehensive guidance alongside.

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