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ISSB developments - Transfer of TCFD monitoring responsibilities and IOSCO endorsement of IFRS sustainability disclosure standards
Publication date: 28 Jul 2023
gx In brief INT2023-16
Key points
- IOSCO has endorsed the first two standards published by the International Sustainability Standards Board (ISSB): IFRS S1, 'General requirements for disclosure of sustainability-related financial information', and IFRS S2, 'Climate-related disclosures'.
- The IFRS Foundation® will take over the monitoring of climate-related disclosures from the Task Force on Climate-related Financial Disclosures (TCFD) as of 2024.
What is the issue?
The International Organization of Securities Commissions (IOSCO) has announced that it has decided to endorse IFRS S1 and IFRS S2.
IOSCO is the international organisation that brings together global securitised regulators, and is the global standard setter for the securities sector.
This decision comes following a comprehensive review of the standards by IOSCO, and extensive engagement between IOSCO and the ISSB. In its assessment of IFRS S1 and IFRS S2, IOSCO concluded that the standards “serve as an effective and proportionate global framework of investor-focused disclosures in relation to climate related matters ... and sustainability-related information”. More detail of the assessment performed can be found on IOSCO’s website.
Another announcement made by the ISSB is that the IFRS Foundation will take over the monitoring of progress on entities’ climate-related disclosures from the TCFD as of 2024, considering that IFRS S1 and IFRS S2 were 'the culmination of the work of the TCFD', according to the Financial Stability Board’s announcement.
What is next?
IOSCO has called on its 130 member jurisdictions (which together regulate more than 95% of the global financial markets) to consider ways in which they might adopt, apply or otherwise be informed by the ISSBTM standards to promote consistent and comparable disclosures for their investors. Local jurisdictions will need to consider whether to adopt IFRS S1 and IFRS S2 as reporting requirements for local entities.
The IFRS Foundation responded to the endorsement announcement in a press release, and has also published an Overview of their Adoption Guide, which outlines mechanisms that the ISSB and the IFRS Foundation are working on to support local adoption of IFRS S1 and IFRS S2.
Additionally, the IFRS Foundation published a comparison of IFRS S2 with the TCFD Recommendations, which will assist entities that who have previously applied the TCFD Recommendations and will need to comply with IFRS S2 in the future.
Where do I get more details?
For the full IOSCO press release, see IOSCO’s media release.
For more details on the content of IFRS S1 and IFRS S2, see PwC In depth 2023-05 and PwC In brief 2023-15.
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