July 11, 2022:

The International Sustainability Standards Board proposals for climate accounting for companies are beginning to receive feedback.

Accounting could provide big demand from corporates for the carbon market supply side.

The document below shows how some people are worried about use of emission credits / offsets to show progress toward meeting corporate emission targets.

Three emerging economy concerns are listed in the slide snipped below.

When the ISSB staff presented to the IFRS Foundation’s
Emerging Economies Group (EEG), there were three areas in
particular that were highlighted and mirrored similar comments
from other stakeholders:

– quantification of current and anticipated effects on a company’s financial performance
– how a company uses scenario analysis; and
– Scope 1-3 GHG emissions across industries, including the requirement to use the GHG Protocol, which is less adopted in some emerging markets, and (whether or not there should be) disclosure of Scope 3 emissions.

It’s possible an independent accounting agency or agencies will in the future value the emissions liability of a company at a given price — corporates might be required to carry eligible, Paris-climate-deal-based carbon credits of the same value on the asset side (See speculative story linked at the bottom).

Feedback is requested by ISSB by July 29.

08 July 2022 unedited statement

ISSB to hold inaugural meeting in Frankfurt 20-21 July, reaching an important milestone

The IFRS Foundation’s International Sustainability Standards Board (ISSB) will hold its first board meeting on 20-21 July 2022 in Frankfurt, reaching an important milestone since its creation announced at COP26 in November 2021.

The ISSB’s remit is to develop sustainability disclosure standards for capital markets.

At the July meeting, the ISSB will begin its discussions on its future priorities and on feedback from stakeholders on the two proposed IFRS Sustainability Disclosure Standards, which are out for public consultation until 29 July 2022.

The ISSB is not expected to make any technical decisions during this first meeting and will continue its discussion of stakeholder feedback after the consultation closes.

The agenda and meeting papers for the ISSB’s July meeting meeting have now been published. (you can also dowload from below)

Recognised process

The ISSB follows the IFRS Foundation’s highly respected due process in setting out its work plan and in developing sustainability-related disclosure standards. This due process is built on the principles of transparency, full and fair consultation, and accountability. The due process requires ISSB technical discussions to take place in public meetings. Stakeholders can download all meeting papers and observe the meetings online or watch recordings on the relevant meeting page…..

Selected details of the feedback:

Concerns have been raised by European stakeholders and NGOs in particular over whether the inclusion of carbon offsetting in accounting rules means “that entities will use these as a replacement for reducing avoidable emissions within the entity’s value chain.“

These concerns are driven in part by the fact that “carbon offsetting has often lacked transparency, with investors finding it challenging to evaluate the use of carbon offsets.“

See this key snip / slide as people send in their preliminary feedback on proposed climate accounting standards. It includes concerns of the “Emerging Economies Group”:

Document

Draft rules

Adding Climate Liabilities to Corporate Balance Sheets Could Boost Speed of Transition; TCFD ‘Not an End in Itself’ (1)