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IFRS Global Sustainability and Climate Reporting Standards to be Released in June

The International Sustainability Standards Board (ISSB) will release finalized global standards for sustainability and climate-related reporting in June. The ISSB was launched in November 2021 to develop IFRS Sustainability Disclosure Standards that can be used by jurisdictions on a standalone basis or incorporated into broader reporting frameworks. The release of the standard is only the first step in establishing a globally consistent and transparent reporting system, with a need to ensure widespread endorsement and adoption by regulators.

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Invert Insights: The release of this framework is set to be a major catalyst in the adoption of sustainability reporting requirements globally, and one step closer towards the amalgamation of financial and sustainability reporting.

Companies Will Soon Have to Prove That They Really are Taking Climate Action, Under Draft EU Law 

The European Union has drafted a law that would require companies to provide evidence to support claims of environmental sustainability. The law aims to combat greenwashing, the practice of making misleading or vague claims about a product's environmental benefits. Companies that make claims about a product's positive environmental impact, such as being "climate neutral" or containing recycled materials, would be required to provide evidence to support those claims, and to disclose any negative impacts the product may have in other areas.

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Invert Insights: As regulations and policies related to sustainability claims become more stringent and widely adopted, companies will need to better understand their supply chains. This will lead to more active monitoring and management of suppliers' sustainability performance, creating more stringent policies related to procurement, and put pressure on suppliers to improve their own sustainability performance in order to maintain or win business from these companies.

ECB Launches New Financed Emissions and Sustainable Finance Indicators to Track Climate Risk

The European Central Bank (ECB) has published a series of new statistical indicators that will help to analyze climate-related risks in the financial sector and track the progress of the sustainable finance market. The launch of these indicators is part of the ECB’s climate action plan which was launched in July 2022. The new data sets cover three areas; sustainable finance, financed emissions, and the impact of physical climate risks on loan and security portfolios, and will help to narrow the climate data gap, which is crucial to make further progress towards a climate-neutral economy.

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Invert Insights: This new set of statistical indicators aims to quantify the vulnerability of organizations and assets by assessing their exposures to transition and physical risks and their ability to withstand them. As the availability of data grows with increased sustainability reporting requirements, the ability to assess exposures and price counterparty risk will continue to improve. 

S&P, UNEP Launch Methodology to Measure Companies’ Nature & Biodiversity Risk

S&P Global Sustainable and the UN Environment Programme (UNEP) have launched Nature Risk Profile, a new methodology to help companies and investors evaluate and understand the risks to nature from their operations and investments. The tool includes metrics and data that can identify and quantify a company's impact on biodiversity and potential risks from proximity to biodiverse areas. The methodology is aligned with the Taskforce on Nature-related Financial Disclosures (TNFD) and will support implementation of its disclosure framework as more companies are facing pressure to assess and report on nature and biodiversity-related issues.

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Invert Insights: Amidst a wave of new biodiversity regulations, following the landmark Global Biodiversity Framework deal at COP15, another tool is launched to provide investors and other stakeholders with the information they need to assess an organization's impacts on biodiversity and exposure to nature-related risks. 

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