The International Sustainability Standards Board (ISSB) chair stated that investors are seeking data on indirect greenhouse gas emissions, which the new U.S. financial disclosure rules do not cover. The U.S. Securities and Exchange Commission (SEC) recently omitted the requirement for companies to disclose Scope 3 emissions from its climate change reporting rules, contrary to the voluntary standards developed by ISSB. Scope 3 emissions, which make up a significant portion of a company's carbon footprint, are seen as important by investors. While the SEC cited concerns about burdening companies and the reliability of reporting, other jurisdictions like the EU and California have passed laws mandating Scope 3 emissions disclosure.
The International Sustainability Standards Board (ISSB) has published its first two finalized standards, S1 General Requirements for Disclosure of Sustainability-related Financial Information and S2 Climate-related Disclosures, which are intended to be the foundation for a comprehensive global baseline of sustainability disclosures specifically focused on the needs of investors and the financial markets. The ISSB standards build on the work of existing sustainability disclosure standards, including the Climate Disclosure Standards Board (CDSB), the Task Force on Climate-related Financial Disclosures (TCFD), and the Sustainability Accounting Standards Board (SASB). The ISSB has also established a memorandum of understanding with the Global Reporting Initiative (GRI) to align their work programs and standard-setting activities.
