In a significant development for climate-related financial disclosures, the International Financial Reporting Standards (IFRS) Foundation will be taking over the monitoring responsibilities from the Task Force on Climate-related Financial Disclosures (TCFD) starting in 2024. This move comes as the IFRS Foundation recently published its inaugural ISSB Standards, IFRS S1 and IFRS S2, which fully incorporate the recommendations of the TCFD. The Financial Stability Board (FSB) has acknowledged these standards as the culmination of the TCFD's important work initiated in 2017.
Commenting, ISSB Chair Emmanuel Faber said:
“The TCFD has been a trailblazer in raising the practice and quality of climate-related disclosures, providing much-needed information to investors about climate-related risks and opportunities.”
With the ISSB Standards building upon the TCFD's groundwork and consolidating investor-focused sustainability-reporting initiatives, the FSB has entrusted the IFRS Foundation with monitoring the progress of climate-related disclosures.
The International Sustainability Standards Board (ISSB) is working diligently to support the effective implementation of IFRS S1 and IFRS S2. These standards establish a global baseline for sustainability-related disclosures, offering companies a framework to communicate with investors about the short, medium, and long-term risks and opportunities associated with sustainability.
Learn more about ISSB releasing its global sustainability disclosure standards
As the ISSB embarks on this new chapter, it seeks to engage stakeholders and shape future standard-setting priorities, ensuring that sustainability reporting continues to evolve and meet the needs of a changing world.
By facilitating transparency, accountability, and comparability, the ISSB Standards will empower investors to make well-informed decisions and foster sustainable financial practices. The transfer of responsibilities further underscores the commitment to continuous improvement in sustainability reporting standards, enabling organisations to address emerging challenges effectively.
ISSB Chair Emmanuel Faber also commented:
“The ISSB has built from and consolidated the market-leading investor-focused sustainability-reporting initiatives to deliver the ISSB Standards, with the TCFD recommendations at the heart of this. As such, the ISSB welcomes the FSB's request to transfer the TCFD’s monitoring responsibilities to the ISSB from 2024 and the opportunity to build on TCFD’s legacy. This announcement provides yet further clarification of the so-called ‘alphabet soup’ of ESG initiatives for companies and investors.”
The IFRS Foundation's assumption of monitoring responsibilities for climate-related disclosures from the TCFD represents a crucial milestone in advancing global sustainability reporting. With the ISSB Standards fully incorporating the TCFD's recommendations, companies worldwide will have a standardised framework to communicate their sustainability-related risks and opportunities.