A new global standard is being drafted for company sustainability reporting.
The move is backed by world leaders, top investors, and regulators, who want to be rigorous in order to incorporate sustainability disclosures. There are also calls to combat the risk of greenwashing or exaggerated sustainability claims by companies.
The first draft sets out general sustainability-related financial disclosures, and the second details specific climate-related disclosure requirements, meaning data on the company's direct and indirect emissions, as well the emissions from their suppliers.
"The standards seek to meet the needs of investors who want to know the impact of sustainability factors on a company's enterprise value, meaning the value of its shares and net debt," said ISSB Vice-Chair Sue Lloyd
"When a company is doing things to people, the planet, the environment which are having impacts, much of that will affect its enterprise value," Lloyd said.
The ISSB will be working in tandem with the EU norms and the U.S. Securities and Exchange Commission has also proposed disclosure rules for listed companies that are very similar to the draft standards.
"We will be working with the SEC and the EU to try to bring our proposals even closer together and make a difference." - Sue Lloyd.