The IFRS Foundation overseeing corporate global sustainability and climate disclosure standards to help investors has compared core requirements with climate-related ones from the Task Force on Climate-related Financial Disclosures that have been folded in.
TCFD disclosure rules have been in effect since 2017. On July 10, the IFRS Foundation's International Sustainability Standards Board said it would assume responsibility for monitoring TCFD disclosure compliance, beginning in 2024.
On June 26, the ISSB unveiled two global sustainability disclosure standards that let investors see how companies manage risks and opportunities, with information tied to corporate financial statements. The data generated by the standards will support price discovery and capital formation, while also helping companies communicate sustainability information to their investors, according to a June statement by ISSB Investor Advisory Group leaders who are executives at the Canada Pension Plan Investment Board and Norges Bank Investment Management.
S1 is a set of disclosure requirements for companies to cover sustainability-related risks and opportunities faced over the short, medium and long term, while S2 covers specific climate-related disclosures. Both standards fully incorporate TCFD recommendations. "One of the drivers of the establishment of the ISSB was the need to address the 'alphabet soup' of sustainability reporting initiatives," the IFRS Foundation said in a statement Monday announcing the comparison.
The ISSB's climate requirements are consistent with TCFD's four core recommendations and 11 recommended disclosures, the comparison said, so companies will not need to apply both. The ISSB climate standards have additional requirements for companies, including disclosure of industry-based metrics, planned use of carbon credits to achieve net emissions targets, and details on financed emissions.