ISSB opens reporting projects on biodiversity and human capital

The International Sustainability Standards Board (ISSB), partner body to the International Accounting Standards Board (IASB) under the IFRS, has announced that it will commence projects to research disclosure about risks and opportunities associated with biodiversity, ecosystems and ecosystem services as well as human capital. The ISSB said that the research projects will focus on the common information needs of investors in assessing whether and how these risks and opportunities could “reasonably” be expected to affect a company’s prospects. As with the approach to the ISSB’s inaugural standards, the ISSB said that it will look at how it might build from relevant pre-existing initiatives. This includes those already under its purview—the SASB Standards and CDSB guidance – and, additionally, relevant aspects of the work of the Task Force on Nature-related Financial Disclosures (TNFD). Disclosure of material information about all sustainability-related risks and opportunities is already required under IFRS S1, with companies asked to refer to sources of guidance – including the SASB Standards – to provide appropriate disclosures beyond climate. “These projects will enable the ISSB to embark on its own standard-setting work in key areas needed to establish more specific disclosures to build out the global baseline of sustainability-related financial disclosures,” said the board. Through the research projects, the ISSB will assess and define the limitations with current disclosure in these areas, identifying possible solutions and deciding whether standard setting is required, it added. The ISSB said its priority for the next two years will be supporting the implementation of the ISSB’s inaugural standards – IFRS S1 and IFRS S2. The two new research projects and work to enhance the SASB Standards will be the ISSB’s other key focus areas. Capacity will be reserved for addressing emerging needs and engaging with the IASB, added the board. “Informed by market feedback, the ISSB decided not to embark on projects related to risks and opportunities associated with human rights – beyond risks and opportunities relating to a company’s own workforce and workers in its value chain – or integration in reporting at this time. However, the ISSB agreed to closely monitor developments in these important areas and may consider including them in a future agenda consultation,” said the ISSB. Both the ISSB and IASB will continue to support the use of the Integrated Reporting Framework as a resource that drives high-quality corporate reporting and provides a cohesive information package for investors, it added. In June, the ISSB expects to publish a summary of the feedback on its agenda consultation, together with its response to the feedback and its work plan for the next two years. ISSB chair Emmanuel Faber said: “Beyond climate, we are committed to building out the global baseline of sustainability-related financial disclosure to meet the needs of investors. Feedback indicated a significant and growing need among investors for improved disclosures around biodiversity, ecosystems and ecosystems services as well as human capital, as a key source of value for companies.” “Our industry-specific SASB Standards continue to be used as a cost-effective way of providing decision-useful information to investors. We are committed to enhancing the SASB Standards further given they will also support our new research areas. We look forward to sharing our work plan for the next two years in June,” he added.

ISSB opens reporting projects on biodiversity and human capital

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