The International Sustainability Standards Board (ISSB) is working towards establishing consistent global standards for sustainability disclosures, emphasizing Scope 3 emissions. By integrating frameworks like TCFD, ISSB standards prioritize enterprise value and sector-specific reporting to meet investor needs. The standards aim to unify global ESG reporting, reduce regulatory fragmentation, strengthen financial markets’ resilience, and transform climate-related corporate disclosures into actionable, investor-relevant insights.
The International Sustainability Standards Board (ISSB), created by the IFRS Foundation in November 2021, aims to establish globally consistent standards for sustainability-related disclosures. The ISSB has released two fundamental standards:
Positioned alongside frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD), the ISSB seeks to unify and standardize ESG reporting to support regulatory compliance and meet investor needs. Acting as a bridge within the sustainability reporting landscape, the ISSB aligns with existing frameworks and technical standards, such as the GHG Protocol and ISO 14064 and integrates financial relevance into sustainability issues, prioritizing enterprise value rather than just technical compliance.
Building on the foundations of the Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and the Climate Disclosure Standards Board (CDSB), the ISSB consolidates their efforts into a cohesive framework. TCFD’s climate risk disclosure model has especially shaped ISSB’s approach to climate-related financial reporting, emphasizing governance, strategy, and risk management to enhance consistency in climate data. The ISSB acknowledges the Global Reporting Initiative (GRI) as a complementary framework, with GRI focusing on broader stakeholder impacts and double materiality, whereas ISSB emphasizes financial materiality. Overall, the ISSB prioritizes the Corporate Carbon Footprint (CCF), promoting global adoption to provide investors with high-quality, transparent, and comparable sustainability data that supports informed decision-making on sustainability risks and opportunities.
Progress is being made in climate-related corporate disclosures, especially in relation to the ISSB's Scope 3 Standards, which are essential for full-scope sustainability reporting.
#1
Even though Scope 3 emissions are not yet fully mandatory globally (except if they are material to the business), 96.7% of jurisdictions working on ISSB standards now require Scope 3 disclosures, acknowledging the essential role these indirect emissions play in comprehensive climate reporting.
#2
The ISSB standards move beyond voluntary reporting. Over 1,000 companies already reference ISSB in their disclosures, and 30 jurisdictions are incorporating these standards into regulatory frameworks, with the International Organization of Securities Commissions’ (IOSCO) endorsement marking a major step forward.
#3
With the adoption of ISSB standards, many jurisdictions will introduce industry-specific disclosures for the first time, ensuring that each sector’s unique sustainability impact is transparent and actionable. This highlights the importance of sector-specific disclosures for capital markets.
#4
The ISSB standards align closely with the TCFD framework, helping bridge gaps for more robust investor-relevant data on climate governance, strategy, and risk management. However, currently most companies do not fully comply with all 11 TCFD recommendations, leaving investors without the complete information needed to accurately assess climate-related risks and opportunities.
Investors and stakeholders are increasingly demanding reliable and comparable data to evaluate climate risks and opportunities. The adoption of ISSB standards, particularly Scope 3, is a key step toward establishing a global baseline for sustainability reporting. This will reduce regulatory fragmentation, create consistency across markets, and strengthen the resilience of global capital markets. By integrating these standards into regulatory frameworks, sustainability disclosures will play a critical role in ensuring the long-term stability and efficiency of financial markets.
COP29, currently being held in Baku, is actively addressing these issues and is a key platform for global cooperation on sustainability reporting, enhancing global transparency in emissions reporting and improving the accuracy of corporate environmental impact data. Key discussions are centered around the need for mandatory climate reporting and the adoption of clear, standardized frameworks like the ISSB standard. This approach is seen as essential for helping businesses and investors meet climate targets, while also paving the way for potential future regulations.
We can assist your organization in calculating emissions and aligning with the ISSB’s standards for sustainability reporting. Reach out to explore how we can support your path toward sustainability!
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