A new era in physical climate risk reporting?

It is hoped that adoption of consistent global standards will lead to more comprehensive and more comparable disclosures, particularly in the area of physical risk.

The International Financial Reporting Standards (IFRS) Foundation established the ISSB in 2021 and began work on developing international standards for climate change and sustainability reporting. The IFRS are a set of accounting rules for the financial statements of public companies intended to make them consistent, transparent, and easily comparable around the world. Relevant authorities in 161 countries have made public commitments to IFRS Accounting Standards as the single set of global accounting standards (you can check the status of your country’s commitment to IFRS reporting standards here.) As a result, many jurisdictions are expected to adopt the ISSB standards. Others, such as the UK and EU, have already adopted climate risk reporting standards, and sustainability taxonomies, and these instruments are forthcoming globally.

The ISSB’s climate-related standard builds on the TCFD guidelines of 2017 and provides more detailed guidance and examples concerning physical risk disclosure than the TCFD.

At its core, the ISSB requires companies to disclose significant climate risk as a whole:

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