More than 20 jurisdictions in the process of adopting ISSB standards

Countries adopting ISSB standards

According to the IFRS Foundation, which is responsible for the International Sustainability Standards Board (ISSB), jurisdictions representing more than half of the global economy have announced steps to use or align with the ISSB disclosure standards (see ISSB press release). This is significantly more than the ISSB expected at this stage, so soon after the two standards (IFRS S1 and S2) were adopted last year. 

Shortly after the ISSB standards were released, the International Organization of Securities Commissions (IOSCO) endorsed them and asked its 130 member jurisdictions, which regulate more than 95% of the world's financial markets, to adopt them. IOSCO Chair Jean-Paul Servais said, “I am encouraged by the fact that not even a year after our endorsement and call to action, so many jurisdictions are seeking to adopt or be informed by the ISSB Standards.”

More than 20 jurisdictions have decided to use the ISSB standards, or are taking steps to introduce the standards in their own frameworks, with the jurisdictions representing nearly 55% of global GDP, more than 40% of global market capitalisation, and over half of global greenhouse gas emissions. They include the UK, Japan, Singapore, Australia, Canada, Brazil, Costa Rica, Bolivia, Hong Kong, South Korea, Malaysia, Kenya, Nigeria and China. The ISSB is tracking these consultations on its website – see here. 

The IFRS Foundation noted that the U.S. Securities and Exchange Commission (SEC) has acknowledged similarities between the ISSB standards and its recently released climate disclosure rules, but that the SEC has so far declined to recognise the ISSB standards for use as an alternative to the new SEC rules. 

The IFRS Foundation has also published an Jurisdictional Guide to help jurisdictions design and plan their journey towards the use of the ISSB standards, including descriptions of various approaches to adoption, including full adoption, partial adoption and permission to use. 

ISSB Chair Emmanuel Faber, in an interview with the FT (subscription required), said: “the momentum [around adoption] is incredible”. Mr Faber went on to say that customising ISSB standards to suit local/national needs is not a problem, as long as the information reported in various jurisdictions is clearly comparable. 

The “vast majority” of the countries working on incorporating the ISSB standards are moving towards full alignment. However, Mr Faber has warned that there will be a cost for companies and investors in jurisdictions that diverge substantially from the ISSB standards. He said a “a small minority” of the roughly 20 jurisdictions that have already decided to use or are taking steps to introduce ISSB standards had proposed substantial changes. And that the ISSB has started discussions with standard setters in Australia, Hong Kong and Singapore who had indicated in consultations that they could use the ISSB framework only partially (see Environmental Finance coverage, subscription required). 

ISSB educational materials 

The IFRS Foundation has also published a Regulatory Implementation Outline in which they set out what educational materials they have already produced or are planning to produce:

Already published 

• Comparison: IFRS S2 Climate‑related Disclosures with the TCFD Recommendations
• Nature and social aspects of climate‑related risks and opportunities; 
• Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards
• Using the SASB Standards to meet the requirements in IFRS S1; 
• How to apply the Integrated Reporting Framework with IFRS S1 and IFRS S2: A mapping tool
• ESRS–ISSB Standards Interoperability Guidance

Working on

The IFRS Foundation/ISSB is working on additional educational materials including on the following topics: 

• proportionality: application of the concept of ‘undue cost or effort’ and ‘skills, capabilities or resources’; 
• materiality; 
• current and anticipated financial effects; and 
• scenario analysis. 

Will consider producing

The IFRS Foundation/ISSB also say they will consider areas for additional content, such as: 

• IFRS S2 applied with the relevant portions of IFRS S1—educational guidance on how IFRS S2 relates to the relevant provisions in IFRS S1 could enhance understanding of the role of IFRS S1, even when disclosure requirements are focused on climate‑related risks and opportunities.  
• Assurance— educational content, developed with partners, could respond to jurisdictional considerations about assurance and how it intersects with regulators’ supervisory and enforcement functions. 
• IFRS Sustainability Disclosure Taxonomy — educational content could support regulators and other relevant authorities in adopting the IFRS Sustainability Disclosure Taxonomy.

Much of the educational material can be accessed via the ISSB’s Knowledge Hub.

Linklaters materials 

For more information on the ISSB standards and what various countries, including the UK, are doing in terms  of national implementation, see our blog posts:

• ISSB publishes final versions of first two global sustainability disclosure standards
• ISSB’s next steps on biodiversity and human capital
• IFRS and EFRAG publish Interoperability Guidance on ISSB Standards and ESRS
• UK consults on using ISSB sustainability disclosure standards
• UK government sets out next steps on SDR implementation
• Japan consults on adopting its sustainability disclosure standards modelled on the ISSB standards
• Mandatory climate reporting for listed and large non-listed companies in Singapore
• Malaysia consults on adopting mandatory ISSB sustainability disclosure standards
• Hong Kong SAR government issues vision statement on adoption of the ISSB standards