• Climate change is an urgent existential issue that is relevant to companies in all sectors and across all jurisdictions. Consistent and comparable information is vital to investors and other stakeholders, including how companies are managing the transition to a low carbon economy
• Much of the value of a business today is non-financial, represented by technology, intellectual capital, human capital, and the social license to operate. Investors and others need insight into these factors to understand how enterprise value is created and sustained
• Investors and other users of corporate information are increasingly demanding comparable and reliable information because long-term returns are affected by global economic growth and wider societal and environmental issues, which have direct impacts on the performance and prospects of companies
• Today’s corporations see themselves as serving ends that go beyond financial success and many are adopting a purpose-led approach. It is important that corporations measure and report on the results of their efforts to live up to the purpose they define for their enterprise. This enhances integrity and authenticity of the environmental and social strategic goals companies are setting out

• ISSB (International Sustainability Standards Board) was established in November 2021 by the IFRS Foundation
• CDP (formerly the Carbon Disclosure Project) runs a disclosure system on environmental impacts that can be aggregated for use in data analytics
• The Climate Disclosure Standards Board (CDSB)* offered a framework for reporting environmental information with the same rigor as financial information
• The Global Reporting Initiative (GRI) develops standards that relate to companies’ impacts on the economy, the environment, and people
• The Task Force on Climate-related Financial Disclosures (TCFD), set up by the Financial Stability Board, provides a framework for companies to report on the effects of climate change on their business
• The Value Reporting Foundation** brings together the Integrated Reporting Framework, which sets out principles for communication on how value is created over time, and the Sustainability Accounting Standards Board (SASB) Standards, which offer enterprise value-relevant sustainability metrics by sector and industry

Deloitte supports corporations disclosing high-quality, transparent, relevant, and comparable non-financial information that is connected to financial information within mainstream corporate reporting. This will help direct capital to long-term sustainable business, by showing how corporations are creating long-term value and by providing insights into their business models, the broader risks they face and the impact they have on people, the economy, and the planet.

The standards should be global so that they can be brought into regulation around the world to achieve harmonization. The issues at stake are global, investors and other stakeholders are often global, and many companies operate and source through global value chains.

Deloitte supports a baseline global reporting standard for sustainability to be developed by the ISSB, which jurisdictions can further supplement. We therefore encourage the closest collaboration between jurisdictions, the ISSB and other international sustainability standard-setters to achieve the greatest possible international convergence. This is consistent with the statement of support at COP26 and prior statements by the G7 and G20 ministers of finance and central bank governors.

To achieve disclosures of the necessary quality, companies need to implement high-quality mechanisms for oversight, controls and verification, including assurance, applying the same rigor as for financial reporting. Independent assurance can enhance the credibility and reliability of information that corporations disclose.

Timeline of moves towards global ESG standards

2022

June

IFRSF Trustees announce appointment of Richard Barker, Verity Chegar, Bing Leng, Ndidi Nnoli-Edozien, Jeffrey Hales and Michael Jantzi as ISSB Board members.

ISSB and GRI announce further details on how to coordinate their work programs and standard-setting activities.

IFRSF Trustees sign memorandum of understanding to obtain the financial support of the Government of Canada and the Government of Quebec for the ISSB.

Several UN organizations respond with a joint statement to the proposed standards of the ISSB, noting that the standards can support global convergence of sustainability-related disclosure, create a common reporting baseline, and help mainstream sustainability-related issues into regular business strategy and management.

European Council and European Parliament reach a provisional political agreement on the CSRD proposed by the EC in April 2021.

May

ISSB publishes summary of the necessary steps required to establish a comprehensive global baseline of sustainability disclosures.

G7 Finance Ministers and Central Bank Governors issue communiqué which welcomes the inauguration of the ISSB and its progress of work on the global baseline of sustainability reporting standards.

Chairs of the IASB and ISSB communicate plans for the future role, governance and development of the VRF’s Integrated Reporting Framework and integrated thinking principles as the VRF is being consolidated into the IFRSF.

April

IOSCO outlines its plans for reviewing the draft ISSB standards, with a view to informing its potential endorsement of the final standards.

IFRSF signs memorandum of understanding that establishes the Montreal presence of the ISSB. The Montreal center will host key functions on behalf of the ISSB, including the coordination of activity across the Americas.

ISSB forms working group comprised of several jurisdictions to enhance the compatibility between the ISSB’s exposure drafts and jurisdictional initiatives.

EFRAG launches consultation on draft ESRS with comments requested by 8 August 2022.

March

SEC issues proposed rule The Enhancement and Standardization of Climate-Related Disclosures for Investors. Under the proposed rule, a registrant would be required to provide disclosures about greenhouse gas emissions (with attestation for Scope 1 and Scope 2 disclosures), certain financial statement disclosures, and qualitative and governance disclosures within its registration statements and annual reports (e.g. Form 10-K)

IFRSF and GRI announce a collaboration agreement under which their respective standard-setting boards, the ISSB and the Global Sustainability Standards Board (GSSB), will seek to coordinate their work programmes and standardsetting activities to enhance interoperability between reporting on enterprise value to meet the needs of capital markets and reporting on impacts to stakeholders more broadly

ISSB launches consultation on its first two proposed standards (IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures), open until 29 July 2022

January

IFRSF announces Sue Lloyd as the ISSB Vice-Chair and Janine Guillot as Special Advisor to the ISSB Chair. In addition, the IFRSF Trustees are seeking to appoint up to eleven inaugural Board members for the newly formed ISSB

The consolidation of the CDSB into the IFRSF is completed

2021

December

IFRSF Trustees appoint Emmanuel Faber to chair the ISSB

November

IFRSF announces the creation of its new ISSB that will develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs

IFRSF Trustees publish a revised constitution and corresponding feedback statement on their consultations

CDSB and the VRF commit to consolidate into the ISSB, which is expected to be completed by June 2022

IFRSF Trustees provide an update on the work of the TRWG. This includes the publication of the Climate-related Disclosures Prototype and the General Requirements for Disclosure of Sustainability-related Financial Information Prototype that the ISSB will build on for their first standards

Finance Ministers and Central Bank Governors from 41 jurisdictions on six continents publicly welcome the announcement of the establishment of the ISSB and its work program to develop a set of internationally consistent, high-quality, and reliable baseline standards for disclosure of sustainability-related information on enterprise value

September

IFRSF conducts stakeholder outreach on the work of the TRWG

July

G20 Finance Ministers and Central Bank Governors publish a communiqué, in which they welcome the work of the IFRSF to develop a baseline global reporting standard under robust governance and public oversight, building upon the TCFD framework and the work of sustainability standard-setters, involving them and consulting with a wide range of stakeholders to foster global best practices

June

G7 Finance Ministers and Central Bank Governors publish a communiqué, in which they support the IFRSF’s initiative on sustainability reporting

IIRC and SASB merge to form the Value Reporting Foundation (VRF), with three key resources: Integrated Thinking Principles, Integrated Reporting Framework and SASB Standards. It is committed to delivering a more coherent corporate reporting system by working closely with the IFRSF and other standard-setters

IOSCO Board publishes a report on issuers’ sustainability-related disclosures that elaborates on IOSCO's vision and expectations for the IFRSF’s work towards a global baseline of investor-focused sustainability standards to improve the global consistency, comparability and reliability of sustainability reporting

May

EC tasks European Financial Reporting Advisory Group (EFRAG) to start technical work to develop draft sustainability reporting standards consistent with the CSRD

The US President’s international climate finance plan references a commitment to work with IFRSF and IOSCO to support and shape their work towards ‘consistent, comparable, and reliable climate-related financial disclosures’ and to enhance the compatibility of resulting recommendations or standards ‘with the US domestic framework and regulatory process’

The European Commission (EC) publishes its proposed Corporate Sustainability Reporting Directive (CSRD), the successor to the Non-Financial Reporting Directive (NFRD)

IFRSF publishes a feedback statement and consultation on constitutional changes which can bring in provisions for ISSB

April

March

IFRSF confirms there is significant support for them to establish ISSB and that it is on track to make an announcement in time for COP26. IFRSF sets up a Technical Readiness Working Group (TRWG) to provide technical input and commits to use the prototype (see above) as a potential basis for a new standard. The group will also consider how technical expertise might transition to a new board, with a view to consolidation. The participants in this group are CDSB, IASB, TCFD, VRF (formerly IIRC and SASB), and WEF with IOSCO as observer

IOSCO sets up a technical expert group to inform the organization on its potential endorsement of ISSB as the global standard-setter for sustainability-related corporate reporting

SEC initiates a public consultation on disclosure rules and guidance on to climate-related disclosures, proposed modifications, potential new SEC disclosure requirements and potential new disclosure frameworks

IOSCO Board commits to work with the IFRSF to develop an effective system architecture for setting sustainability disclosure standards under a new International Sustainability Standards Board (ISSB). They see this as a potential route to developing standards that can serve as a ‘baseline for consistent and comparable approaches to mandatory sustainability-related disclosures across jurisdictions’

February

2020

December

The ‘Group of 5’ issues a prototype climate-related financial disclosure standard to illustrate how their different frameworks and standards, together with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), could form the basis of a global standard. It is intended to give the IFRSF a running start in developing sustainability reporting standards

October

WEF International Business Council (IBC) publishes Measuring Stakeholder Capitalism, which includes 21 core metrics covering the pillars of principles of governance, planet, people and prosperity. The metrics leverage standards from the five leading sustainability standards and framework reporting providers. The project highlights that business wants to be part of the solution, and acts as a catalyst towards global standards

September

IFRS Foundation (IFRSF) issues a consultation on establishing a sustainability standards board. It received nearly 600 responses

The leading sustainability standard-setters and frameworks (‘Group of 5’: CDP, Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB)) issue a Statement of Intent. In this, they set out a vision for a comprehensive corporate reporting system and make a commitment to work together and with the IFRSF to achieve this. The work was facilitated by Deloitte, the Impact Management Project (IMP) and the World Economic Forum (WEF)

ESG Reporting Acronyms

Acronym

Name

What they do

How they fit in with moves to global sustainability reporting standards

Standard-setters and frameworks

CDP

(Formerly Carbon Disclosure Project)

Runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts, with a particular focus on climate change. Its system is based on a questionnaire that is sent to companies on a range of climate-related topics, from which it develops rankings, benchmarks and data feeds

Committed to work towards comprehensive corporate reporting system (Statement of Intent) and developed prototype climate-related financial disclosure standard

CDSB

Climate Disclosure Standards Board

An international consortium that provides companies a framework for reporting environmental information to investors with the same rigor as financial information

Committed to work towards comprehensive corporate reporting system (Statement of Intent) and developed prototype climate-related financial disclosure standard

Member of IFRSF Technical Readiness Working Group (TRWG)

Issued staff educational paper in March 2021 on the intersection of ESG and financial accounting standards

Responsible for setting accounting standards for public companies in the US (Generally Accepted Accounting Principles)

Financial Accounting Standards Board

FASB

Member of TRWG

TCFD recommendations support effective climate-related financial disclosures to investors, based on the pillars of governance, strategy, risk management, metrics & targets. Established by the Financial Stability Board (FSB)

Task Force on Climate-related Financial Disclosures

FSB-TCFD

Committed to work towards comprehensive corporate reporting system (Statement of Intent) and developed prototype climate-related financial disclosure standard

Signed a memorandum of understanding with EFRAG

Sets standards for reporting to stakeholders on economic, environmental and social impacts, providing information about an organization’s positive or negative contributions to sustainable development

Global Reporting Initiative

GRI

Issued Staff Audit Practice Alert, The Consideration of Climate-Related Risks in an Audit of Financial Statement in October 2020

Published Extended External Reporting (EER) Assurance Non-authoritative Guidance in April 2021

Sets high-quality international standards for auditing, assurance, and quality control that strengthen public confidence in the global accounting profession

International Auditing and Assurance Standards Board

IAASB

Published educational material: Effects of climate-related matters on financial statements in November 2020

Member of TRWG

Independent body responsible for development and publication of International Financial Reporting Standards (IFRS), which are adopted in 144 jurisdictions

International Accounting Standards Board

IASB

Concluded consultation on establishing an international sustainability standards board (ISSB). IFRSF is on track to announce the new ISSB by COP26

Established the TRWG and is consulting on constitutional changes to bring in ISSB

A not-for-profit, public interest organization established to develop a single set of high-quality, understandable, enforceable and globally accepted accounting standards. It appoints members of IASB

International Financial Reporting Standards Foundation

IFRS Foundation

/ IFRSF

See entry under VRF below

International Integrated Reporting Council

IIRC

The board that IFRSF proposes to establish alongside IASB with a remit to set global sustainability reporting standards

The intention is for ISSB to play the same role for sustainability reporting that IASB plays in financial reporting

International Sustainability Standards Board

ISSB

See entry under VRF below

Sustainability Accounting Standards Board

SASB

Merged entity of IIRC and SASB from June 2021 to provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards to drive global sustainability performance.

VRF has three key resources: Integrated Thinking Principles, Integrated Reporting Framework and SASB Standards

• Integrated Reporting Framework: Integrated reporting is a process founded on integrated thinking for communicating how an organization’s strategy, governance, performance and prospects lead to the creation of value in the short, medium and long term
• SASB Standards: Standards for disclosure of sustainability information to investors, by sector. SASB Standards identify issues most relevant to enterprise value creation across 77 industries

Committed to work towards comprehensive corporate reporting system (Statement of Intent) and developed prototype climate-related financial disclosure standard

Member of TRWG

Value Reporting Foundation

VRF

Other bodies with direct interest in moves to sustainability reporting standards

The executive branch of the European Union, responsible for proposing legislation, enforcing EU laws and directing the union's administrative operations

Develops the Corporate Sustainability Reporting Directive (CSRD) aimed at improving sustainability reporting and ensuring it is brought into a company’s management report to better leverage the potential of the European single market and to contribute to the transition to a fully sustainable and inclusive economic and financial system in line with the European Green Deal and the UN Sustainable Development Goals (SDGs)

European Commission

EC

Private body, established by the EU to serve the European public interest, in developing and promoting European views in the field of financial reporting, ensuring that these views are considered by the IASB, and advising the EC on endorsement of IFRS for use in the EU

Reforms of EFRAG are underway under a proposed CSRD, so that it is expected to become the EU standard-setter for European sustainability reporting standards from 2022. The EC has already tasked EFRAG to start the work for developing and proposing EU sustainability reporting standards

European Financial Reporting Advisory Group

EFRAG

Promotes international financial stability by coordinating national financial authorities and international standard-setting bodies in developing strong regulatory, supervisory and other financial sector policies, and encouraging coherent implementation in jurisdictions

Established TCFD in response to addressing systemic risks of impact of climate change on financial stability

Financial Stability Board

FSB

The global organization for the accountancy profession, comprising 180 member and associate organizations in 130 countries and jurisdictions, representing nearly 3 million professional accountants

Issued statements in support of global sustainability reporting standards under the umbrella of IFRSF

International Federation of Accountants

IFAC

The international body that brings together the world's securities regulators and is recognized as the global standard-setter for the securities sector

Sits on the Monitoring Board that oversees IFRSF

Established a Technical Expert Group under its Sustainable Finance Taskforce that will undertake preparatory work in advance of IOSCO‘s potential endorsement of the ISSB as the global standard-setter for sustainability-related corporate reporting

Observer of TRWG

International Organization of Securities Commissions

IOSCO

A plan of action for people, planet, peace and prosperity, signed by governments in 2015, comprising 17 Sustainable Development Goals and 169 targets to be achieved by 2030

No direct connection to global standard-setting but SDGs are a frequent reference point in corporate reporting

United Nations’ Sustainable Development Goals

UN SDGs

An international organization for public-private co-operation, aiming to engage political, business, cultural and other leaders of society to shape global, regional and industry agendas

The WEF’s International Business Council (IBC) has identified 21 common metrics for value creation, known as Stakeholder Capitalism Metrics. The project is seen as a stepping stone towards global sustainability reporting standards

Member of TRWG

World Economic Forum

WEF / The

Forum

1 Governance & Accountability Institute, S&P 500 + Russell 1000 - Examining 2020 sustainability reporting trends of the largest publicly-traded companies in the U.S.

2 BlackRock, Sustainability goes mainstream: 2020 Global Sustainable Investing Survey

3 The work of the ‘Group of 5’ was facilitated by Deloitte, the World Economic Forum and the Impact Management Project.

* CDSB consolidated into the ISSB in January 2022.

** In June 2021, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) merged to form the Value Reporting Foundation (VRF). VRF committed to consolidate into the ISSB, which is expected to be completed by June 2022.