New global sustainability disclosure standards won’t bring quick local relief

A lot of hope rests on the International Sustainability Standards Board's (ISSB) coming framework for sustainability- and climate-related disclosures.

Given the reputation and reach of the ISSB's backers, many see the new board as being in the best position to drive the Great Unification of sustainability and climate disclosures - the great variation of which has left many feeling like they're flailing about in a sea of inconsistent and incomplete data.

But, much as the ISSB's new guidelines will be welcome, they are also unlikely to bring quick relief to the markets. The journey from draft standards to on-the-ground implementation can be a less-than-straightforward path - one which Singapore companies will have to learn to navigate.

The journey thus far

The ISSB's influence and its potential for driving meaningful change stems from its creation by the IFRS Foundation Trustees, who are responsible for the governance and oversight of the International Financial Reporting Standards (IFRS) Foundation and the International Accounting Standards Board (IASB). These entities issue the world's most widely adopted reporting and accounting standards.

Since its launch in November, the ISSB has wasted little time getting to work. It has already wrapped up public consultation on two exposure drafts: one on sustainability-related disclosures, and the other on climate-related disclosures. Details are available on the IFRS's website (

The board is currently assessing and discussing the feedback it received, and new standards from these consultations are expected by the end of the year.

The ISSB's output is meant to provide a comprehensive global baseline of sustainability-related disclosure standards, thereby providing investors and other capital-market participants with information about companies' sustainability-related risks and opportunities to help them make informed decisions.

This does not, however, mean that the standards will then automatically come into effect the world over.

Making it local

In the case of Singapore, for example, as with the accounting standards issued by IFRS and IASB, local authorities will likely look over the new sustainability and climate-related standards to determine their suitability and applicability to local markets before deciding to adopt them in part or in full.

Here, the Accounting Standards Council (ASC) issues the Financial Reporting Standards, along with the Singapore Financial Reporting Standards (International) and the Singapore Financial Reporting Standards for Small Entities that are used by companies here. These are based on the various IFRS issued by the IASB. The ASC determines their applicability locally, including when they are to take effect.

The local bourse and market regulator, the Singapore Exchange (SGX) has also begun rolling out climate reporting requirements for listed companies, on a "comply or explain" basis in their sustainability reports. Any new disclosure requirements would need to be reconciled with current ones before they are adopted - and ensuring a good fit will take some time and effort.

But not just local

And, it's not just a case of making the new standards sync with domestic or jurisdiction-specific rules and practices - there are also the other international reporting requirements to think about.

There are currently no fewer than 3 different internationally recognised reporting frameworks when it comes to sustainability and/or climate-related disclosures.

These include: the sustainability reporting framework developed by the Global Reporting Initiative (GRI) and arguably the most widely used of these standards today; the greenhouse gas (GHG) accounting and reporting standards issued by GHG Protocol; and the framework developed by the Task Force on Climate-Related Financial Disclosures (TCFD), created by the Financial Stability Board (FSB).

While these do each have a somewhat different focus and purpose, there are aspects of them that overlap.

There are also standards that have not yet been implemented, but are in the works - such as the sustainability reporting standards being developed by the European Financial Reporting Advisory Group (EFRAG) for the European Union (EU), and new climate disclosure requirements being mulled by the US Securities and Exchange Commission (SEC), which will eventually affect Singapore companies operating in these jurisdictions. The ISSB has, however, formed a jurisdictional working group - of which EFRAG and the SEC are part of - to look at how their respective proposals stack up.

The ISSB's offering will not override any of these but, instead, have to sit alongside them. And, each jurisdiction will face an uphill battle in determining how these new standards will work alongside existing ones, so as to create a comprehensive - and more importantly, comprehensible - reporting landscape for its affected entities.

Ready, or perhaps not

There's also the issue of individual readiness. Sustainability and climate reporting can still be regarded to be in their nascent stages, and most reporting entities and markets lack the technical expertise and know-how to fully embrace their reporting requirements.

The ISSB has said that its standards are intended to be compatible with jurisdiction-specific requirements, and that it is working closely with international organisations and jurisdictions to support their inclusion into jurisdictional requirements.

But a number of responses to its public consultation have pointed out that not all jurisdictions - and indeed, not all industries, sectors and companies within each jurisdiction - are at the same level of readiness when it comes to adopting these new standards.

Leading Singapore organisations, in their comments, asked for flexibility or a phased implementation. For example, the Institute of Singapore Chartered Accountants (Isca) said it received feedback, through its outreach, that the ISSB's proposed standards are being set too high as a baseline; the accounting body said it would be difficult "to expect the landscape to immediately progress from the current state to one where many preparers could fully comply with the standards".

The Monetary Authority of Singapore said different jurisdictions and entities have varying maturity levels in reporting systems, and that a phased adoption would help to ensure more consistent compliance. The Singapore Exchange (SGX) also suggested a phased approach and asked that the effective date for the ISSB Standards to be 24 months or longer.

These suggest that the ISSB's standards, even if there are to be issued on time by the end of this year, will unlikely take effect until some time later - and even longer, if at all - before they help bring about the establishment of a harmonious sustainability and climate reporting landscape.​


BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to