In recent years, the number of environmental, social and governance (ESG) reporting frameworks and standards has grown substantially leading to confusion and inconsistent disclosure requirements in the market resulting in added burden to retailers. With a multitude of misaligned ESG reporting standards, corporates and investors have demanded harmonization towards a unified ESG disclosure framework and this has led to the recent creation of an international sustainability board. Last November, the International Financial Reporting Standards (IFRS) Foundation, which governs how financial reporting is conducted in 166 countries, created the new International Sustainability Standards Board (ISSB) in order to drive consolidation in ESG reporting.
The ISSB is actively working to create a consolidated ESG reporting framework by June 2022 which will integrate the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF). The VRF was formed in 2021 after a merger between the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC). To further drive standardization, on March 24, 2022 the IFRS Foundation and the Global Reporting Initiative (GRI) released a statement to announce that they have reached a collaboration agreement with respect to alignment in standard-setting.
On March 31, 2022, the ISSB released drafts of the first two ISSB standards for public consultation and held webinars to provide overviews of the drafts accordingly. The exposure drafts build upon the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and incorporate industry-based requirements derived from SASB Standards. The consultation period ends on July 29, 2022, with ISSB aiming to finalize the requirements by the end of the year, subject to feedback.
Finally, on April 6, 2022, the IFRS Foundation and Chartered Professional Accountants of Canada (CPA Canada) made an agreement to establish the Montreal centre of the ISSB. As ISSB’s hub for the Americas, the Montreal centre will host key functions such as standard-setting workshops and leadership meetings.
RCC believes that the formation of ISSB is a positive step towards global standardization that will reduce administration and simplify processes for corporates, investors and other stakeholders. We will continue to monitor these developments to align multiple international ESG initiatives into a more cohesive approach moving forward.
To better support members in this area, RCC recently launched an ESG & Climate Action Committee. Key areas of focus include:
- Government policy and incentives;
- Scope 3/sustainable supply chains; and,
- ESG and greenhouse gas reporting.
This committee will meet on a bi-monthly basis with additional member-led working groups to tackle topics of interest including the first group, Climate Risks & Opportunities. This working group will be meeting within the first two weeks of July to facilitate discussion on climate disclosure and possible common retailer methodologies/positions for reporting frameworks and standards like ISSB, CDP, TCFD and others.