A child runs as climate change activists gather to protest outside of BlackRock headquarters ahead of the 2021 United Nations Climate Change Conference (COP26), in San Francisco, California, U.S., October 29, 2021. REUTERS/Carlos Barria
Planned new global corporate sustainability disclosures will include the full range of carbon emissions, but with 'relief provisions' on measuring greenhouse gas discharges from a company's suppliers.
The International Sustainability Standards Board (ISSB) said it has made "significant progress" in refining its draft standards, that were put out for public consultation.
The ISSB standards are expected to be used by countries like Britain, though the European Union and United States are drafting their own climate-related company disclosures as regulators seek more rigorous reporting to crack down on 'greenwashing'.
Illuminate possibilities. Identify Risks. Drive the innovation that helps make transformative journeys possible. That’s how the planet and its people can prosper together.
The ISSB said its board has voted unanimously to require company disclosures on Scope 1, 2 and 3 greenhouse gas emissions, with relief provisions for Scope 3.
"This relief will be decided at a future meeting and could include giving companies more time to provide Scope 3 disclosures and working with jurisdictions on so-called ‘safe harbour’ provisions," the ISSB said in a statement on Friday.
Scope 1 refers to the company's own direct emissions, Scope 2 to indirect emissions from purchased energy, with Scope 3 referring to all other indirect emissions, for example through the use of their products.
The latter has proven particularly contentious, with companies pointing to incomplete data as a hurdle for accurate reporting. Critics counter that Scope 3, for many firms, captures the bulk of emissions and must be kept in the rules.
In the United States, the Securities and Exchange Commission has yet to confirm its rule book for climate disclosures.
While initially planning to cover Scope 1, 2 and 3, business associations for top U.S.-listed companies have pushed back and it remains unclear what the final rules will be.
Global companies are also worried that a patchwork of official standards will emerge without closer coordination, adding to cost and confusing investors.
The G20's Financial Stability Board last week called on the standard setters to ensure "interoperability" between their norms and avoid "hardwiring" differences.
The ISSB said on Friday it has prioritised several topics to "facilitate the ongoing dialogue with jurisdictions... such as the EU to ensure the ISSB’s global baseline of sustainability disclosures is interoperable".
"Its aim is to complete deliberations on the proposed Standards around the end of 2022, with the view to issue the final Standards as early as possible in 2023," the ISSB said.