On 3 November 2021, at COP 26, the International Financial Reporting Standards (IFRS) Foundation Trustees the establishment of the International Sustainability Standards Board (ISSB). The ISSB will develop high-quality global baseline climate and sustainability disclosure standards to meet investors鈥� information needs.听
ob体育 Commissioner Cathie Armour said, 鈥榦b体育 welcomes the establishment of the International Sustainability Standards Board and is supportive of its objectives.鈥�
鈥楾he establishment of the ISSB is a major step in setting global sustainability standards and addressing climate risk. ob体育 supports the ISSB giving priority to a standard on climate-related disclosures. Consistent, comparable and relevant information is critical to fully informed decisions by investors鈥�, Ms Armour said.
The ISSB will sit alongside and work in close cooperation with the International Accounting Standards Board.听
The International Organisation of Securities Commission (IOSCO) Sustainable Finance Taskforce (of which ob体育 is a member) recently examined corporate sustainability disclosure practices globally. It that investor demand for transparent, comparable sustainability related information is often not currently being met. The proposed work of the ISSB should address these challenges.
On 3 November, the IFRS Foundation published a standard(Prototype Standard) developed by a Transition Readiness Working Group (TRWG). The Prototype Standard builds on a prototype developed by five prominent international bodies that used components of their frameworks and standards, along with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Prototype Standard is likely to assist the new ISSB in developing an exposure draft of a climate standard for a public consultation process in 2022.
For further information see the IFRS Foundation鈥檚 .
What should Australian listed companies do?
ob体育 encourages listed companies to use the TCFD recommendations as the primary framework for voluntary climate change-related disclosures. Listed companies reporting climate-related information under TCFD are expected to be well placed to transition to any future standard. Listed companies should consider all guidance published by the TCFD including the recent .
The requirement for listed entities to prepare an Operating and Financial Review (OFR) that accompanies and complements the financial report remains unchanged. continues to apply.
ob体育鈥檚 role
ob体育 will continue to closely monitor developments in climate and sustainability reporting in Australia and internationally. We will consult with stakeholders to better understand the practical implications of international developments on Australian listed companies and developing disclosure practices in Australia. We will provide further updates as ISSB standards develop.
Internationally, ob体育 is a member of the IOSCO Sustainability Technical Experts Group, which worked closely with the TRWG and will provide input to the ISSB with a view to possible IOSCO endorsement of the ISSB standards.
Domestically, ob体育 is a member of the .
Background
Report 593 Climate risk disclosure by Australia鈥檚 listed companies sets out ob体育鈥檚 recommendations relating to the consideration and disclosure of climate risk.
ob体育 encourages directors听 and senior management of listed companies and their advisors to:
- Consider climate risk听- directors and management of listed companies should understand and continually reassess existing and emerging risks, including climate risk
- Develop and maintain strong and effective corporate governance听- strong corporate governance facilitates identifying and managing material risks
- Comply with the law听鈥� directors should consider disclosure of material business risks affecting future prospects in an OFR, and
- Disclose useful information to investors 鈥�听directors of listed companies with material exposure to climate risk should consider reporting voluntarily under the TCFD framework.