Global Update
The International Sustainability Standards Board (ISSB) has announced an official partnership with the Greenhouse Gas (GHG) Protocol, securing a memorandum of understanding that ensures ISSB's involvement in future governance and decisions on GHG Protocol standards. Furthermore, the ISSB will assume the responsibilities of the UK Transition Plan Task Force (TPT), an initiative introduced in 2021 at COP26, to streamline climate transition plan reporting within the ISSB’s climate-related disclosure standards (IFRS 2). The IFRS Foundation, ISSB's parent organization, will now oversee the disclosure-specific materials developed by TPT.
These initiatives are part of ISSB's broader strategy to align with organizations like the CDP, Taskforce on Nature-related Financial Disclosures (TNFD), and Global Reporting Initiative (GRI). This concerted effort highlights ISSB's commitment to rapidly converge and harmonize global sustainability reporting standards.
Australian Update
On 27 March 2024, Schedule 4 to the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) was introduced in the House of Representatives to establish an ISSB-aligned mandatory climate reporting regime in Australia. This legislation, differing from the consultation draft, notably pushes the commencement date for Group 1 entities reporting, to 1 January 2025, with phased-in disclosure requirements starting from this date instead of the originally proposed 1 July 2024.
Even without mandatory requirements, companies face significant pressure to manage and disclose their climate-related financial risks and broader sustainability risks. The release of the ISSB's initial sustainability standards will enhance and extend these existing requirements. Once legislated, the new Australian requirements are expected to set a baseline, rather than a limit, for market expectations in this area.
As highlighted in our earlier news alert, ‘How Will 2024 Mandatory Disclosures Impact Supply Chains and SMEs?’, the ISSB's mandatory directive on Scope 3 emissions disclosure places immediate pressure on businesses, including SMEs, to monitor and report emissions and key sustainability metrics to customers. This impacts various aspects of Australian business operations, including compliance with export market regulations, local supply chains, government contracts/tenders, infrastructure projects, and access to finance.
With the Australian Sustainable Finance Taxonomy expected to be introduced alongside the ISSB-mandated reporting standards in January 2025[1], we highly recommend that Australian companies prepare by developing a time-bound plan to address their sustainability positions and transition plans.
[1] We will soon post a new article on this topic
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