Global sustainability standards chief expects strong take up of climate rules

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LONDON — The head of a global standard setter for corporate sustainability disclosures said he expected more than 40 countries to adopt initial rules on climate reporting when they go live in 2024.

The International Sustainability Standards Board (ISSB) passed a key milestone last Thursday by approving rules that will form a ‘baseline’ for companies’ climate-related reporting across the globe, to better help investors assess risks and opportunities.

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Despite parts of the data underpinning the disclosures remaining patchy, and with some companies further ahead than others, getting rules in place quickly is seen as a crucial part of the world’s transition to a low-carbon economy.

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The big challenge now, ISSB Chair Emmanuel Faber told Reuters, was in recognizing that disclosures were effectively a new “language” and to help companies, investors and regulators get used to it.

“We believe that the sooner market participants start to speak the language, to use the language … the more profound the adoption of that language will be and the faster, more fluent everyone will be about actually counting what counts.”

Launched at the COP26 climate talks in 2021 with the backing of multiple countries, Faber said he expected them all to use the ISSB framework as a baseline when the so-called S1 and S2 climate disclosure rules go live.

“I think more than 45 jurisdictions supported the creation of ISSB 18 months ago. I don’t think they’ve changed their mind. But we haven’t suddenly engaged in any organized manner with any of them.

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It will be up to a country to decide whether to implement ISSB disclosures, with the United States and European Union having chosen to introduce their own respective norms in moves companies hope won’t lead to multiple or conflicting disclosure ‘languages’.

Faber said ISSB would start a consultation in the second quarter over its next goal, which included expanding the climate-related issues captured by the rules, with feedback due by year-end.

“We think that momentum is critical here. We have immediately started research to add more pixels to our climate standards looking at biodiversity, water, deforestation and human capital-related, climate-related, topics, like reskilling of the workforce, for instance, if you change your business models.” (Reporting by Simon Jessop; Editing by Emelia Sithole-Matarise)