ISSB to ‘harmonize disclosures’ on corporate climate transition plans

The International Sustainability Standards Board (ISSB) on Monday said it would release guidance to standardize how companies worldwide publish details on their climate transition plans to meet net-zero goals. 

Climate transition plans are becoming increasingly important for businesses as companies face more regulations and deadlines for slashing carbon emissions. Such plans are already mandatory for listed companies in the EU under the bloc’s corporate sustainability disclosure regulation. Elsewhere, reporting by companies is largely voluntary, with the actions of some company boards outpacing policymakers. 

Businesses listed outside the bloc, such as in Britain, Canada, and across Asia, are set to apply disclosures written by the ISSB that require information on climate transition plans to be disclosed if a company has one. Climate-related disclosures in the U.S. have been approved but face a court challenge. 

"To support application of these disclosure requirements and to reduce fragmentation in information provided in the market, the ISSB plans to support work to streamline and consolidate frameworks and standards for disclosures about transition plans," the ISSB said in a statement.

“The focus of the ISSB in this regard will continue to be on the provision of high-quality, decision-useful information about the plans that companies have... rather than requiring that companies engage in transition planning, per se."

According to data tracker CDP, the number of companies claiming to have made a climate transition plan jumped by nearly half in 2023, though many still do not give investors enough information to check their claims. 

The ISSB was established by the International Financial Reporting Standards (IFRS) Foundation to address and help harmonize the proliferation of voluntary disclosures and ultimately ensure that investors receive the most accurate and high-quality information about sustainability-related risks and compliance. 

More than 20 jurisdictions are taking steps to introduce ISSB guidance in some form, representing more than half of global economic growth, more than 40% of global stock market capitalisation, and more than half of global greenhouse gas emissions, the G-20 backed organisation said last month. They include Australia, Bolivia, Brazil, Britain, Canada, China, Costa Rica, Hong Kong, Japan, Kenya, Malaysia, Nigeria, Singapore, and South Korea. The EU has been included among the 20 as the bloc and the USSB have agreed that their respective disclosures are interchangeable for global firms. 

“Transition plans are increasingly being considered by investors as part of their broader review of climate disclosures and, where they are published by corporates, would benefit from a level of consistency and comparability to assist investors in their decision-making,” said IOSCO Chair Jean-Paul Servais.