It will be up to individual countries to decide whether to require public companies to adopt the standards, said ISSB President Emmanuel Faber, adding that the standards will be able to be used in annual reports from 2024.
Canada, UK, Japan, Singapore, Nigeria, Chile, Malaysia, Brazil, Egypt, Kenya and South Africa are considering its use, Faber told Reuters.
The standards are based on the voluntary standards of the G20 Task Force on Climate Finance Disclosures (TCFD).
The UK is the first major economy to require TCFD disclosure by registered companies.
The ISSB is part of the independent International Financial Reporting Standards foundation, which also writes the accounting standards used in more than 100 countries. Global securities watchdog IOSCO is expected to “approve” the new rules.
David Harris, Head of Strategic Sustainable Finance Initiative at the London Stock Exchange Group, said the new standards bring more rigor to sustainability reporting and better align with financial reporting.
Harris notes that 42% of the world’s top 4,000 companies do not provide data on Scope 1 and 2 carbon emissions.
That is, capital markets are less effective because you don’t have the complete picture, says Harris. Under ISSB rules, companies must disclose material emissions, with verification by external auditors.
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