Announcement of the establishment of the International Sustainability Standards Council (ISSB)
The IFRS Foundation announced the establishment of the International Sustainability Standards Council ("ISSB") on November 3, 2021. It also announced that by June 2022, VRF [i] and CDSB [ii], which are the bodies that set existing disclosure standards, will be integrated into ISSB.
At the time of the announcement of the establishment of ISSB, the working group TRWG announced two prototypes that are considered to indicate the direction of future consideration of ISSB.
"General Requirements for Disclosure of Sustainability-related Financial Information Prototype" defines the basic method, content, and way of thinking for companies to disclose sustainability information.
"Climate-related Disclosure Prototype" requires disclosure of climate-related physical risks, transition risks, and opportunities from the four perspectives of "governance", "strategy", "risk management" and "indicators and goals".
However, specific and detailed disclosure is required even when compared with the disclosure items of the TCFD [iii] recommendations.
In the future, it is expected that further disclosure of sustainability information will be required in each country with the ISSB standards in mind. It is desirable for companies to steadily respond to TCFD recommendations and expand their scope to sustainability themes other than climate change while preparing for ISSB standards that are an extension of that.
[i] VRF (Value Reporting Foundation) was established in June 2021 by the merger of IIRC (International Integrated Reporting Council) and SASB (Sustainability Accounting Standards Council).
[ii] CDSB (Climate Disclosure Standards Board) is promoting the disclosure of climate change information by building a global framework with the aim of standardizing the disclosure of climate change information of companies.
[iii] With TCFD (Task Force on Climate-related Financial Disclosures), at the request of the G20, the Financial Stability Board (FSB) will consider how to disclose climate-related information and respond to financial institutions was established for.
(i) "Climate-related Disclosures Prototype - Supplement: Technical Protocols for Disclosure Requirements","Summary of the Technical Readiness Working Group’s Programme of Work","Climate-related Disclosures Prototype" and "General Requirements for Disclosure of Sustainability-related Financial Information Prototype" developed by the Technical Readiness Working Group, chaired by the IFRS Foundation, to provide recommendations to the International Sustainability Standards Board for consideration in November 2021