ISSB looks to drum up support for global climate baseline ahead of COP28

A statement seen by RI asking organisations to ‘champion’ its climate standards is viewed by some as a further sign the standard setter is struggling to get backing for a global baseline.

The International Sustainability Standards Board (ISSB) has asked organisations to sign a statement ahead of COP28 committing to “advancing the adoption and use” of its climate standard as “the global climate baseline”.

ISSB was launched in 2021 by the IFRS Foundation with the aim of creating a global baseline for corporate sustainability standards focused on so-called enterprise value or single materiality. In June this year, it published its final general reporting standards (IFRS S1) as well as standards on climate (IFRS S2).

The standard setter has circulated an email and statement, seen by Responsible Investor, asking organisations to sign by 24 November. According to the form for signatories, it has approached a wide range of organisations including companies, asset managers, asset owners, industry group and regulators, among others.

“The COP28 agenda is focused on uniting a diverse range of stakeholders around specific solutions that deliver results-oriented climate action,” it says. “Uptake of the ISSB standards around the world provides one such solution and we are looking to visibly demonstrate this reality.”

It adds that “the benefits of consistent, comparable, decision-useful climate-related disclosure will only be realised through an international groundswell of uptake and implementation”.

The ISSB is asking organisations to “champion” its climate standard as a global baseline at COP28 by signing the following statement: “Climate risks are increasingly having a real effect on companies and capital.

Therefore – in response to calls for climate action at COP28 – we support the establishment of market infrastructure to enable consistent, comparable climate-related disclosures at a global level. We are committed to advancing the adoption and use of the ISSB’s climate standard as the climate global baseline.”

In recent weeks, Australia has announced its draft sustainability reporting standards developed based on S1 and S2, and Brazil said the ISSB standards will be incorporated into the country’s regulatory framework. The UK government has previously said it will base its regime on the ISSB and “only divert from the global baseline if absolutely necessary for UK specific matters”.

But the ISSB’s COP28 call also comes as further question marks are emerging around whether the standards will see global uptake.

After Emmanuel Faber’s controversial public pushback last month on double materiality – which underpins the EU’s new sustainability reporting standards – Mirova CEO Philippe Zaouati told RI in response that the ISSB momentum “is not that good”, adding that “not a lot of regulators [are] saying they are going to adopt ISSB”.

The COP28 statement can be interpreted as a further sign that this is the case, two other market participants told RI.

One market observer, who has received the statement, said: “Our interpretation is that they desperately need support for the global baseline narrative. I’m not sure if we’ll sign it.”

They added that so far, there are few concrete signs that the ISSB will become a global standard because few countries have indicated they will adopt it in full. “The politics are just not there for some jurisdictions, while for others the ISSB will not be ambitious enough – so I’m not sure where I see a global baseline right now.”

RI asked the IFRS why it has approached organisations ahead of COP28, whether the uptake of the S1 and S2 standards has been in line with expectations and whether there are any concerns around its goal to create a global baseline.

A spokesperson said: “As evidenced by recent announcements, including by Brazil, statements from the G7 and G20, and active consultations publicly confirmed by numerous other jurisdictions, we continue to see significant momentum for both mandatory and voluntary adoption of the ISSB Standards following the publication of IFRS S1 and IFRS S2 in June 2023, and their endorsement by IOSCO in July. We look forward to providing an update on this progress at COP28.”