The IFRS Foundation presented a comprehensive progress report to the Financial Stability Board (FSB), highlighting that over 1,000 companies have referenced the International Sustainability Standards Board (ISSB) in their disclosures, and 30 jurisdictions are moving toward incorporating ISSB Standards into legal or regulatory frameworks. This shift reflects growing alignment with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, a responsibility the IFRS Foundation assumed after TCFD disbanded in 2023.
The report reveals that 82% of companies have disclosed data consistent with at least one of the 11 TCFD recommendations, though fewer than 3% meet all recommendations. This gap suggests investors may lack critical information needed to evaluate climate risks and opportunities. As regulatory adoption of ISSB Standards advances, following IOSCO’s endorsement in July 2023, jurisdictions are expected to move from voluntary to mandated disclosures, promising greater consistency in sustainability information within capital markets.
Insights from the report detail the progress of 30 jurisdictions in embedding ISSB Standards, particularly around climate disclosures. It shows that scope 3 GHG emissions disclosures are broadly prioritised; 29 jurisdictions include Scope 3 in their frameworks, with some providing transitional relief. Also, industry-specific disclosure requirements are under consideration in 28 jurisdictions, although only two plan to make them voluntary at first. The report also reveals that 90% of jurisdictions plan to address all sustainability-related risks and opportunities, with some focusing initially on climate risks.
Notably, some jurisdictions have adjusted initial proposals to align more closely with ISSB Standards, responding to stakeholders’ calls for a unified global baseline. Investors and multinational companies warn that extensive modification of ISSB Standards by individual jurisdictions could risk regulatory fragmentation, complicating compliance for entities engaged in cross-border operations or global supply chains.
A significant feature of adopting ISSB Standards is the potential for many jurisdictions to implement industry-specific disclosures for the first time. The SASB Standards, as the only established suite of industry standards for sustainability disclosure, are seen as foundational to the ISSB’s global baseline. They are expected to play a key role in ensuring the effective implementation of the ISSB’s IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
Additionally, the FSB released its 2024 report on consistent climate-related disclosures, summarizing key points from the IFRS Foundation’s findings and underscoring the increasing importance of comparable, regulated climate data globally.
ISSB Chair Emmanuel Faber said, This progress report underscores the significant and encouraging progress in disclosure of climate-related information. But further action is needed to address the fact investors are still not receiving the information they need to assess and price appropriately climate and other sustainability-related risks and opportunities. Through jurisdictional initiatives and the voluntary choices companies are making, often in response to investor demand, we continue to see momentum build.”
He added, “The introduction of sustainability-related disclosure requirements into regulatory frameworks through the adoption or other use of ISSB Standards, building on the strong foundations laid through the TCFD recommendations and progressing towards a more comprehensive and assurable set of requirements, is of vital importance for the healthy functioning of capital markets around the world.”