ISSB announces that Climate Transition Plans are going global
3 MINUTE READ | BY KATE JONES AND NICK WYVER | 24 JUN 2024
The International Sustainability Standards Board (ISSB) kicked off London Climate Action Week this morning with several announcements about their focus for the next two years.
The announcements come a week after the news that more than 20 countries around the world representing more than 55% of global GDP have either agreed to adopt - or are moving toward adopting - the ISSB Standards as legal or regulatory requirements.
Sue Lloyd, ISSB Vice Chair, was clear the focus for the ISSB over the next two years is going to be supporting businesses to implement the standards. A key part of that is making it easy for businesses to do – and so many of the new announcements centre around harmonisation with existing frameworks.
So - what do you need to know?
Transition Plans move centre-stage
In our view, the most exciting announcement is that the ISSB is going to use the Transition Plan Taskforce’s (TPT) disclosure-specific materials as its foundation for its own work on transition planning. This looks to pave the way for taking on responsibility for TPT’s mandate and work in the way ISSB has already done with TCFD.
As a reminder, the ISSB standard focused on climate – IFRS S2 – doesn’t mandate that companies develop a transition plan in the same way that CSRD does. But it does require that companies disclose information on transition planning if it exists.
Why is this important?
Climate transition plans are a hugely important part of how we decarbonise at the pace required. This is because they move beyond businesses simply discussing what their net zero target is to requiring companies to lay out how they are going to decarbonise. This information is increasingly important for almost all stakeholders and enables groups from investors to customers to hold businesses to account much more strongly.
And beyond that, our view is that the TPT framework provides by far the clearest framework for developing a practical, holistic climate transition plan. That view is shaped in part by Kate Jones, our Climate Strategy Lead, having seconded into the TPT to help develop the original sector specific standards, as well as a wide array of client conversations and projects.
The news today that should lead to the core parts of the TPT framework being used as the central tenets of disclosures in line with IFRS2 makes enormous sense. It builds on the widespread industry consultation that TPT have carried out, and aligns with the wide range of impressive climate transition plans that we are already seeing being published.
What is the market doing already?
“5,906 companies [1 in 4 disclosers] reported having climate transition plans in place last year, with a further 36% expecting to create one by 2025”
As CDP’s latest survey shows, many businesses are already developing climate transition plans - and many are choosing to use the TPT framework as their base.
Vodafone and NatWest are among the prominent UK businesses to choose to voluntarily align with the TPT framework - but the importance of the announcement from the ISSB today will be to help ensure standardisation across other jurisdictions globally.
We’ll of course be keeping close to further developments, including any changes that ISSB make to the TPT framework as they look to ensure that a framework developed chiefly in the UK is fit for purpose globally. One question that remains: what will EFRAG do about transition plans as part of CSRD? EFRAG is currently developing guidance, and we certainly hope that they tend toward alignment with TPT (and now ISSB), rather than an entirely different framework emerging.
Want even more information on transition plans? You can read our blog from a couple of months ago that lays out exactly what a transition plan is and how the TPT framework functions here.
The next areas of focus for ISSB
ISSB has taken a staged approach, with its initial standards focused on general sustainability disclosures and climate-specific disclosures. It announced (again, having previously touched on this) that it would accelerate its research to develop disclosure standards on:
Biodiversity, ecosystems, and ecosystem services
Human capital (including both own workforce and workers in the value chain)
The ISSB’s staged approach continues to contrast with the ‘big bang’ approach that CSRD has adopted, requiring disclosure of all (material) standards right from the start.
Further alignment with other standards and frameworks
And finally, continuing the theme of alignment and interoperability, the ISSB also announced that:
It will continue to partner with the GHG Protocol (which ISSB mandates companies use in disclosures) to ensure that the work of the GHG Protocol continues to provide information that capital markets can make use of; and
It will continue to work with CDP on climate disclosures, and ensure interoperability with the GRI where shared disclosures address the ‘distinct scopes and purposes’ of each.
Working with us
If you want to get in touch to learn more about the work we do, or just want to chat through today’s developments, do get in touch.
Kate Jones
Sustainability Strategy Director
kate.jones@sbandco.com
Nick Wyver
Consultancy Director
nick.wyver@sbandco.com
Get in touch
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