The Financial Stability Board (FSB) has formally invited the International Sustainability Standards Board (ISSB) to take over the Task Force on Climate-related Financial Disclosures’ (TCFD) role monitoring companies’ progress on climate-related disclosures.
In a statement, the FSB said that the ISSB is “well-placed” to take on the responsibility following the publication of its first two sustainability reporting standards.
The FSB added that the ISSB’s new standards mark “the culmination of the work of the TCFD”, which was established in 2017 at the FSB’s request.
ISSB chair Emmanuel Faber welcomed the FSB’s decision, saying it “provides yet further clarification of the so-called ‘alphabet soup’ of ESG initiatives for companies and investors”.
Faber went on, saying that the ISSB remains “committed to building on the TCFD’s legacy” and to “deliver high-quality standards that will benefit companies, investors, and the environment”.
The ISSB released International Financial Reporting Standard S-1, the General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S-2, Climate-related Disclosures just two weeks ago.
The two standards draw heavily on the existing work of the TCFD and follow the four pillars that made up the TCFD’s core content components of governance, strategy, risk management, and metrics and targets.
Additionally, the TCFD was also instrumental in laying the groundwork for the ISSB’s work through its participation in the IFRS Foundation’s Technical Readiness Working Group (TRWG).
The group also comprised the Climate Disclosure Standards Board, the International Accounting Standards Board, the Value Reporting Foundation, and the World Economic Forum – together dubbed the Group of Five.
In November 2021, the TRWG released prototype climate and general disclosure standards to signal what the new global baseline in sustainability reporting might look like.
The additional new responsibility comes at a time when the ISSB is facing questions over its ability to deliver beyond its initial two standards.
Last month, Mathilde Mesnard from the Organisation for Economic Cooperation and Development warned the board that its work plan risked becoming overly ambitious.
She told a 2 June meeting of the ISSB’s Sustainability Consultative Committee that there were questions about whether the board could tackle new projects alongside its existing commitments.