The International Sustainability Standards Board is proposing to create a digital version of its recently released climate and sustainability standards through a taxonomy similar to the kind used for International Financial Reporting Standards and U.S. GAAP.
The ISSB, which operates under the auspices of the IFRS Foundation alongside the International Accounting Standards Board, posted Thursday a proposed IFRS sustainability disclosure taxonomy for public comment. The proposals reflect the disclosure requirements in its first two standards — IFRS S1, “General Requirements for Disclosure of Sustainability-related Financial Information,” and IFRS S2, “Climate-related Disclosures” — both of which were finalized late last month (see story).
On Tuesday, the International Organization of Securities Commissions, an association of organizations that regulate the world’s securities and futures markets whose members include the Securities and Exchange Commission, endorsed both standards. In the U.S. the Financial Stability Oversight Council’s Climate-related Financial Risk Committee issued a staff progress report Friday on the various actions underway across the federal government to assess climate-related financial risks. The committee brings together staff from the FSOC’s member agencies, including the Treasury Department and the SEC.
Like the IFRS and U.S. GAAP taxonomies, the ISSB taxonomy would use Extensible Business Reporting Language to improve comparability of data among companies. The SEC and financial regulators abroad have been requiring companies to file their financial statements in XBRL format as a way to allow analysts and investors to compare corporate financials more easily.
The ISSB noted that a common digital taxonomy is needed to facilitate structured digital reporting of sustainability-related financial information that’s prepared using the ISSB standards.
The board has been working for some time on a digital taxonomy for the two standards to facilitate digital use of sustainability-related financial disclosures when they’re first applied by companies. The proposed taxonomy arrives as the U.S. and other parts of the world are experiencing record-shattering temperatures this summer. Scientists have declared July to be Earth’s hottest month ever.
“Investors increasingly consume information digitally, therefore it’s important that we facilitate digital consumption of sustainability-related financial information,” said ISSB chair Emmanuel Faber in a statement. “Our proposed digital taxonomy is designed to make it easier for investors to extract, compare and analyze the information companies provide.”
The ISSB is looking for feedback on the proposal over the next two months. The 60-day consultation period ends Sept. 26. At that point, the ISSB will examine the comments in the second half of this year, with the goal of issuing a final digital taxonomy early next year.
The ISSB plans to host a webinar on Aug. 3 to discuss the proposed taxonomy. For more information on the taxonomy, click here.
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