Climate reporting: An update post COP26
18th November 2021
Climate reporting: What’s new?
At COP26, the IFRS Foundation (IFRS), the International Financial Reporting Standards board, announced the creation of the International Sustainability Standards Board (ISSB), which will develop global standards for sustainability disclosures for capital markets. The aim is to establish reliable, comparable and globally consistent sustainability disclosure standards for companies, regulators and investors, as is already the case with financial reporting.
Although disclosure prototypes which have been published to date (which focus on climate related disclosures and general sustainability disclosures) are not currently binding, companies will need to begin to monitor how the jurisdictions in which they operate begin to implement them. Different jurisdictions will have specific frameworks for adopting and applying the new standards. The UK has confirmed that it considers the ISSB to be a fundamental feature of its sustainability reporting requirements going forward. For companies that have adopted the Task Force on Climate-Related Financial Disclosures [1] recommendations, the transition to the new standards should be uncomplicated.
The IFRS Foundation has also committed to consolidating the Climate Disclosure Standards Board and the Value Reporting Foundation by June 2022. This merger will ensure as little disruption to companies as possible, as the ISSB will build on existing disclosure frameworks.
Practical advice
Companies should now familiarise themselves with the information which will be disclosable under the ISSB’s standards. In addition to regulatory compliance, this will be essential in light of the fact that such disclosures are increasingly likely to form part of any investors’ due diligence. Momentum also suggests that companies should prepare for a potentially rapid implementation of the new standards.
How we can help
Even over and above the legal and regulatory framework, businesses today are increasingly commercially and socially motivated to voluntarily provide additional reports and claims relating to their environmental and sustainability ambitions. Walker Morris is a multi-disciplinary commercial law firm, with specialist lawyers experienced in corporate and climate reporting, as well as all other aspects of the environmental, social, governance (ESG) agenda. Please do not hesitate to contact Ben Sheppard for further information or advice.
[1] Please see our recent briefing for more information on the Task Force on Climate-Related Financial Disclosures and for practical advice associated with corporate climate reporting obligations generally.
