Commercial, GHG Emissions, Industrial - July 12, 2023
IFRS Takes Over Monitoring of Sustainability-Related Disclosures
The IFRS Foundation will begin monitoring the progress of companies’ climate-related disclosures from the Task Force on Climate-related Financial Disclosures (TCFD).
Starting in 2024, ISSB Standards will be applied around the world. The IFRS Foundation will take over these responsibilities from the TCFD, which has been monitoring progress on climate-related disclosures against the recommendations since they were published.
The IFRS Foundation will take the lead following the publication of the inaugural ISSB Standards—IFRS S1 and IFRS S2.
Both IFRS S1 and IFRS S2 incorporate the recommendations of the TCFD.
The FSB said the standards mark "the culmination of the work of the TCFD", which was established in 2017 at the request of the Financial Stability Board.
The ISSB is working to support implementation of IFRS S1 and IFRS S2, which provide a global baseline of sustainability-related disclosures worldwide, including capacity building and monitoring progress towards the broad use of high-quality disclosures.
The TCFD has been a trailblazer in raising the practice and quality of climate-related disclosures, providing much-needed information to investors about climate-related risks and opportunities,” said ISSB Chair Emmanuel Faber in a statement. “The ISSB has built from and consolidated the market-leading investor-focused sustainability-reporting initiatives to deliver the ISSB Standards, with the TCFD recommendations at the heart of this. As such, the ISSB welcomes the FSB's request to transfer the TCFD’s monitoring responsibilities to the ISSB from 2024 and the opportunity to build on TCFD’s legacy. This announcement provides yet further clarification of the so-called ‘alphabet soup’ of ESG initiatives for companies and investors.”
IFRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium, and long term.
IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. The ISSB is currently consulting on future standard-setting priorities beyond these inaugural Standards.