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The International Sustainability Standards Board (ISSB) will include reporting requirements on Scope 3 carbon emissions, which are emissions from the entire value chain, in its upcoming sustainability-related disclosure standards, as reported by Reuters on October 21. The ISSB voted unanimously at its October meeting to request company disclosures on Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions in accordance with the current version of the GHG Protocol Corporate Standard. The ISSB will also set relief provisions for Scope 3 to give enterprises more time to provide Scope 3 disclosures for compliance, with the relief provisions to be finalized at a future ISSB meeting. In addition, the ISSB will cooperate with jurisdictions in ‘safe harbor’ provisions, which exempt or reduce companies’ liability on information disclosed to investors and other capital market participants.
The International Financial Reporting Standards (IFRS) Foundation launched the ISSB last November to develop a comprehensive global baseline of high-quality sustainability disclosure standards for investors’ information needs. The ISSB has proposed two standards, the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (General Requirements Exposure Draft) and the IFRS S2 Climate-related Disclosures (Climate Exposure Draft). According to the Climate Exposure Draft, companies are required to disclose Scope 1 to 3 emissions in terms of quantitative data and their targets on emissions in a sustainability report that needs to be published at least once a year. Although the ISSB standards have yet to be mandatory, securities regulators across jurisdictions are expected to endorse the standards.
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