Developments in global sustainability reporting from COP28

New commitments on sustainability-related financial disclosures

During COP28, the IFRS Foundation announced three new commitments to support efficient and resilient capital markets through robust sustainability-related financial disclosures. Apart from capacity building, the IFRS Foundation will advance jurisdictional adoption of the ISSB standards through bilateral dialogues with governments and regulators and it will work closely with both the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB) on this. In addition, it will advance new standard-setting initiatives to build out the global baseline of sustainability-related disclosures following feedback on the ISSB’s recent Consultation on agenda priorities.

Declaration of support for climate-related disclosures

At the Finance Day of COP28, close to 400 organizations, including associations, companies, investors, stock exchanges and accounting institutes from dozens of jurisdictions, made commitments to advance the adoption or use of the ISSB’s climate standard, IFRS S2, as the climate global baseline. In response to calls for climate action at COP28, these organizations declared support for the establishment of market infrastructure to enable consistent and comparable climate-related disclosures at a global level. Many regulators and standard setters have also welcomed the work of the ISSB, as jurisdictions around the world start considering how they may incorporate the ISSB standards into their regulatory frameworks.

Culmination of the work of TCFD

In July 2023, following the issuance of IFRS S1 and IFRS S2, the Financial Stability Board asked the IFRS Foundation to take over the monitoring of the progress on companies’ climate-related disclosures from the TCFD. While there are additional requirements in IFRS S2 compared with TCFD recommendations, companies applying IFRS S1 and IFRS S2 will also meet the TCFD recommendations, as they are fully incorporated into these two standards. TCFD recommendations represent a helpful starting point for companies as they move to use the ISSB standards. COP28 marked the official end of the work of the TCFD and the further consolidation of the disclosure landscape.

Conclusion

There is growing support from a wide range of stakeholders to adopt or use ISSB standards and companies need to monitor whether jurisdictions in which they operate will require sustainability reporting in accordance with these standards. At the same time, it is recognized that companies need more guidance in order to navigate the implementation process and thus there is a global effort to make the relevant resources more accessible to them.