An international body set up to standardise company environmental reporting has set out a first set of draft guidelines today, as fears grow over the veracity of investment opportunities labelled as green.
The International Sustainability Standards Board (ISSB), set up at Cop 26 last year, has published two sets of standard designed to establish a “global baseline of sustainability disclosures.”
Boss of the ISSB Emmanuel Faber said the group’s backing from across private and public sectors presented it with an opportunity to drive change.
“Rarely do governments, policymakers and the private sector align behind a common cause. However, all agree on the importance of high-quality, globally comparable sustainability information for the capital markets,” he said.
“These proposals define what information to disclose, and where and how to disclose it. Now is the time to get involved and comment on the proposals.”
The ISSB’s proposals guidelines cover governance, strategy, risk management and metrics and targets, and will aim to provide businesses and investors with a tangible set of guidelines to measures the sustainability of investment opportunities.
It comes amid growing concerns of the veracity of investment opportunities marketed to investors as green and ESG.
Russia’s invasion of Ukraine has also sparked a reckoning of the ESG label after it was revealed that $8.3bn of ESG funds had investment in Russia, Bloomberg reported.
ISSB Vice Chair Sue Lloyd said the standards will also look to meet the needs of investors who want to know the impact of sustainability factors on a company’s enterprise value, meaning the value of its shares and net debt.
The group also published proposals today setting out specific climate-related disclosure requirements covering “Scope 1-3,” meaning data on firms’ direct emissions, indirect emissions from purchased energy, and indirect emissions from a company’s value chain, such as raw material suppliers.
Businesses often set emissions target across scope one and two and exclude indirect emissions in scope, three.
The ISSB will now be consulting on the rules until 29th July.