ISSB Gives Companies an Extra Year to Disclose Scope 3 Emissions

Companies reporting under the new climate disclosure standards being developed by the International Sustainability Standards Board (ISSB) of the IFRS Foundation will be given an additional year to report on Scope 3 emissions, or those originating in a company’s value chain and beyond its direct control, according to an announcement by the ISSB following its December meeting.

Launched last year at the COP26 climate conference, the ISSB is currently in the process of developing its first 2 proposed standards for company sustainability and climate related disclosures around the end of this year, and to issue the final standards as early as possible in 2023. Regulators in major jurisdictions around the world including Europe, the UK and the U.S., among others, have introduced or are preparing mandatory sustainability reporting requirements for companies, and most will be heavily influenced by the ISSB standards.

Reporting requirements around Scope 3 emissions are one of the most controversial aspects of the emerging disclosure regimes. These emissions very often account for the vast majority of many companies’ carbon footprints, but are typically the hardest to track and calculate, occurring outside of the direct control of companies, in areas such as supply chains, or in their customers’ use of their products.

The ISSB confirmed in October that Scope 3 emissions disclosure will be included in its new climate reporting standard, but also said that it would develop “relief provisions” in order to help companies apply the Scope 3 requirements, possibly including giving companies more time to provide Scope 3 disclosures, as well as giving companies protection or reduced liability on disclosed Scope 3 information.

As part of the series of guidance and reliefs set out at its December meeting, the ISSB agreed to a temporary exemption of a minimum of 1 year from the implementation of the climate standard, in order to give time for companies to implement processes.

The ISSB also indicated that the standard will allow companies to include information not aligned with its reporting cycle if the information is collected from value chain companies with different reporting cycles.

Additionally, the ISSB reported that it agreed to refine proposed requirements for financed emissions, which typically represent the bulk of financial institutions’ Scope 3 emissions, to support financial sector preparers with the measurement and disclosure of portfolio emissions.

Sue Lloyd, Vice-Chair of the ISSB, said: 

“We recognise that companies need help, as best practice continues to develop, in measuring Scope 3 GHG emissions. The ISSB believes the reliefs and guidance agreed this week will provide companies with the time to get their processes in place, and the guidance to support this disclosure.”

Source: https://www.esgtoday.com/issb-gives-companies-an-extra-year-to-disclose-scope-3-emissions/?utm_source=feedly&utm_medium=rss&utm_campaign=issb-gives-companies-an-extra-year-to-disclose-scope-3-emissions