The International Sustainability Standards Board (ISSB) has announced the launch of a working group to address the challenge of building compatibility between its two recent exposure drafts and sustainability disclosure requirements in different jurisdictions.

The first working group meeting will take place in May, with a second meeting scheduled for July.

In a statement, ISSB chair Emmanuel Faber said: “There is strong public interest in seeking to align where possible the international and jurisdictional requirements for sustainability disclosures.

“We have a window of opportunity to do just that, given that the ISSB’s proposals are out for comment at the same time as several major jurisdictions are also seeking public input on their proposals. I look forward to a fruitful exchange of ideas.”

Next quarter the ISSB will create a new advisory body known as the Sustainability Standards Advisory Forum to facilitate regular dialogue with, and high-level advice from, a broad set of jurisdictions, it said.

These latest developments follow the launch of the ISSB last November and the release last month of the ISSB’s first two draft reporting standards for public comment.

The first of the two standards sets out the broad requirements for disclosing sustainability financial information to primary users of financial statements. The second sets out requirements for identifying, measuring and disclosing climate-related risks and opportunities.

Sustainability standard setting in local jurisdictions is a relatively new development that has emerged in parallel with the launch of the ISSB.

On the one hand, the ISSB’s standards focus on providing investors with information that is relevant or material to enterprise value.

Local sustainability standards, however, can have a broader group of stakeholders in mind and are purely local or jurisdictional.

In the US, the Securities and Exchange Commission (SEC) recently released draft rules on company climate disclosure requirements.

The new ISSB working group will be made up of representatives from the Chinese Ministry of Finance, the European Commission, the European Financial Reporting Advisory Group (EFRAG), the Japanese Financial Services Authority, the Sustainability Standards Board of Japan Preparation Committee, the UK Financial Conduct Authority and the SEC.

The ISSB hopes to establish its standards as the global baseline for sustainability disclosure reporting. The aim is for local jurisdictions either to adopt this global baseline outright or to use it as a starting point when setting their own local requirements.

Norway’s sovereign wealth fund has given a warm welcome to the draft standards, saying the rules could be used as the core when other bodies develop broader codes.

EFRAG taskforce gives way to TEG

Meanwhile, EFRAG this week unveiled the membership of its new Sustainability Reporting Technical Expert Group (TEG), drawn from 11 different EU member states.

In a statement, EFRAG said the group woud provide technical advice on new EU Sustainability Reporting Standards to the EFRAG Sustainability Reporting Board (SRB).

The EFRAG SRB will then submit its draft standards as technical advice to the European Commission for adoption by the EC as delegated acts. The standards will accompany the Corporate Sustainability Reporting Directive (CSRD).

The appointment of members to the advisory group completes the process of integrating sustainability reporting within the EFRAG structure, the group said. A project taskforce (PTF-ESRS) that had been working on the European sustainability reporting standards met for the last time this week.

“The appointment of the EFRAG Sustainability Reporting TEG is an important milestone in the governance reform and in the transition of the work of the PTF-ESRS to the permanent structure consisting of the EFRAG SRB and EFRAG SR TEG,” said EFRAG board president Jean Paul Gauzès.

“I welcome all members of the EFRAG SR TEG. They all have very strong knowledge and experience on the topics that will be covered and I am convinced that they will bring the best of their expertise to our work.”

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