New proposals for climate-related disclosure standards by ISSB – This is what you need to know 

International investors increasingly demand information on environmental, social and governmental (ESG) matters. Transparency around sustainability and climate-related affairs gains relevance today more than ever. According to the IFRS (International Financial Reporting Standards) Foundation, the current regulations do not ensure that climate-relevant information is disclosed to a reasonable extent, but still encourages an inconsistent and selective application of voluntary standards. 

ISSB

In November 2021 at COP26 in Glasgow, the formation of the International Sustainability Standards Board (ISSB) was announced. The ISSB is an independent private-sector body that operates under the oversight of the IFRS Foundation. Its aim is to develop a globally applicable and comprehensive set of sustainability disclosure standards that works for major economies as well as for emerging markets. 

Therefore, the ISSB has proposed two new standards, in order to create further consistency, comparability and reliability across climate disclosure. The standards require companies to reveal relevant information about its significant sustainability-related risks and opportunities, necessary for investors to assess a company’s enterprise value. The G7 welcomes the establishment of the International Sustainability Standards Board and calls on all relevant stakeholders to participate in the ongoing consultation on the proposed standards. In order to create a practical, flexible and proportionate disclosure baseline, that is ultimately suitable for small- and medium-size enterprises, the G7 invites other reporting initiatives to cooperate in the process of elaborating the baseline.

Based on the work of existing investor-focused reporting initiatives – including the Climate Disclosure Standards Board, the Task Force on Climate Related Financial Disclosures (TCFD) and the World Economic Forum´s Stakeholder Capitalism Metrics – the ISSB is working towards the incorporation of the global baseline into legal requirements, with the aim to become the global standards-setter for sustainability disclosure for the financial markets. 

Both of the new standards are mainly built upon the recommendations of TCFD. While one of the proposals sets out general sustainability-related disclosure requirements, the other specifies on climate-related disclosure. Learn more about the climate-related disclosure requirements in the following.

What is the goal of the ISSB Climate-related Disclosure Standards?

The objective of „IFRS S2 Climate-related Disclosures“ is to require a company to disclose information about its exposure to significant climate-related risks and opportunities. This enables investors to access relevant information in order to make climate-compatible and sustainable financial decisions. The goal is to assess the effects of significant climate-related risks and opportunities and to understand how a company’s use of resources and activities support managing its risks as well as to evaluate the options to adapt planning, business model and operations to significant climate-related risks and opportunities. Companies are required to disclose information along the dimensions Governance, Strategy, Risk Management and Metrics & Targets. Find more detailed information on the disclosure regulations along those dimensions in the following section.

1. GOVERNANCE

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2. STRATEGY

3. RISK MANAGEMENT

4. METRICS & TARGETS

How do companies prepare for the ISSB requirements? 

Since enterprises will be required to disclose climate-related information along these four dimensions, they will face the challenge to collect climate-relevant data and analyze their climate performance. How do companies prepare for that?

Today, many companies are already using data-driven software tools, which helps them to analyze their climate performance holistically. The Climate Performance Assessment offers a fast and structured data analysis aligned with internationally recognized standards. It enables companies to holistically analyze their climate performance along the four dimensions Governance, Strategy, Metrics & Targets and Transparency. The Climate Performance Assessment is fit to meet the ISSB’s climate-related disclosure requirements as it covers the key disclosure information. 

You want to know more? Download our new Whitepaper to find more details on the upcoming ISSB standards and how to prepare for them here.

Image: Unsplash

Prioritizing Climate Transparency in the Technology sector

Karli Cumber

Interview partner: Karli Cumber is responsible for any marketing, social media communications, and sustainability related activates for Footprint Technologies. The Berlin start-up develops an AI based technology that enables users to always find the perfect fit for selected apparel during online shopping. In this way, Footprint Technologies provides online retailers with a solution to reduce the high number of returned products, and thus saving CO2 and costs.

In an interview with THE CLIMATE CHOICE, Karli shares Footprint Techologies’ challenges and progress in implementing their own climate transformation and how the Climate Readiness Check has helped them.

Can you briefly introduce yourselves to our CLIMATE Community?

At Footprint, our greatest climate goal is to reduce the amount of CO2 emissions related to returns and reshipments in the footwear industry. Our challenge is to reduce negative environmental effects caused by the processes of shoe returns, specifically due to improper fit. We have started in the children’s shoe segment and this year we are starting to make our way into the adult shoe segmentation. Our services offer a foot measurement technology, which is intended to find the correct-size fitting shoe based on the exact dimension of the shoes’ manufacturing. In 2021, we published our first ‘Sustainability Report’ for the company, where we discussed our climate commitments and partnerships such as with The Climate Choice, as well as reevaluate our current practices. This includes our internal climate code of conduct, to best support our overall climate mission.

What are the biggest climate-related challenges you face in your daily lives?

As we are mostly working digitally, also remotely, we don’t necessary encounter too many climate related challenges on a daily basis, such as transport or paper printing/usage. But because we are a green-minded company, in our Sustainability Report we summarize the day-to-day activities which support our climate mission. Some of these include our energy consumption of our software, mobility, team learning, and event participation. Overall, we make it a priority to choose more environmentally friendly options when available, and create a welcoming space for learning and open dialogue within our team. Additionally, we provide opportunities and encourage the team to learn about sustainable options, for them to pursue a sustainable lifestyle outside of work.

Together we carried out the Climate Readiness Check. What was your motivation?

Our motivation to conduct the Climate Readiness Check was to get insights on where our company currently stands at with our climate efforts and to increase our score as a company.

What were the most important lessons you learned?

From the results of our Climate Readiness Check, we learned that we are extremely transparent when it comes to our climate efforts. While this factor may seem obvious for a company that specializes in technical solutions, we find that our transparency is something that can serve as a model throughout our industry. Other than that, we also took note of the areas for improvement as we continue to look forward. We have learned, there are many different areas that are necessary to be considered during a Climate-Scoring.

What are the best practices that you would like to pass on to other organizations?

We would encourage other organizations to prioritize transparency and enable positive climate thinking. We recognize that it is important to consider the environment in our work solutions and moreover to implement this commitment as an integral part of our values. We want to drive forward change in our industry and encourage future partners or collaborators to think the same way. As technology has the favorable quality of constantly being ready to adapt, also our climate actions should be adaptable.

You want to know more about the Climate Readiness Check? Do not hesitate if you want to learn how our software service is enabling you to take the next steps forward. Contact us for more information