CDP to integrate ISSB standards into disclosure platform

Hope was expressed that more businesses will be able to kickstart their journey on transition plans as more legislative frameworks come in

The IFRS Foundation Trustees marked Finance Day at COP26 last year by confirming the formation of an International Sustainability Standards Board (ISSB) to create a global baseline for corporate sustainability disclosures that meet investor demands. The ISSB was first proposed by the not-for-profit International Financial Reporting Standards Foundation (IFRS Foundation), earlier that year.

The aim of the ISSB is to unify disclosures from corporates, helping investors and other stakeholders to properly compare their sustainability performance and related risks. At present, the Foundation has stated, a patchwork of various voluntary disclosure guidelines has made meaningful comparisons of corporate environmental credentials complicated.

One year one at COP27, the IFRS has confirmed that CDP will incorporate the (ISSB’s) IFRS S2 Climate-related Disclosures Standard (IFRS S2) into its disclosure platform.

According to CDP, this move will help deliver a global baseline to investors by taking the standard, which is still being finalised, and adding it to CDP’s questionnaires, which are set to companies annually on behalf of 680 financial institutions with over $130trn in assets.

Additionally, CDP will provide investors with access to environmental data based on the questionnaire. More than 13,000 companies disclose to CDP and the organisation claims that it will be able to provide the IFRS Foundation with standardised disclosure data across multiple geographies that align with the upcoming standard whilst reducing the reporting burden on companies.

“As warnings of the closing window to avoid climate catastrophe grow louder this global baseline standard for financial markets is an important step forward,” CDP’s chief impact officer Nicolette Bartlett said.

“It will not only further support companies and financial institutions to build resilience and adapt, as climate risk disclosure was found to do by the Intergovernmental Panel on Climate Change, but to further increase ambition and action. Disclosure is the bedrock of action: what we don’t measure we can’t manage. We live in a global world and need a global understanding of the risks we face, the solutions available, the progress made and the laggards holding us back. CDP is pleased to put our weight behind driving the implementation of this long-awaited global standard.”

The IFRS Foundation had previously issued a commitment to consolidate the Climate Disclosure Standards Board (CDSB—an initiative of CDP) and the Value Reporting Foundation, which houses the Integrated Reporting Framework and the SASB Standards into one entity by June 2022. This is designed to ensure that the new Board builds on these existing disclosure frameworks to ease the process for corporates.

Earlier this year, the ISSB announced the launch of a consultation on sustainability disclosures.

The ISSB’s consultation on streamlined proposed global standards for sustainability disclosures was launched in July. In advance of the consultation, the ISSB published its “Exposure Draft” for climate-related disclosures which outlines the recommendations it believes can be introduced to help unify reporting processes.

Hundreds of investors and chief financial officers have written to the ISSB to outline their recommendations that they deem crucial to creating a standardised reporting framework for non-financial disclosures.

Additionally, more than 80 chief financial officers worldwide have signed a joint letter calling for the ISSB to improve the current proposals.

Commenting on the announcement, Emmanuel Faber, Chair of the ISSB, said: “The ISSB is committed to delivering an effective, efficient disclosure eco-system for global capital markets, resulting in decision-useful climate-related disclosures. By aligning the CDP platform to the ISSB’s climate-related standard, we are reducing the burden on entities and moving a step closer to that common language for disclosures.

“With the demand for robust disclosure as strong as ever, we are delighted that 18,000 preparers will be voluntarily disclosing data structured to IFRS S2 from the 2024 disclosure cycle.”

Are you struggling to keep up with all of these acronyms and frameworks? Read edie’s A-Z guide of ESG frameworks here.