Aakash Pansari, Climate Change, Oracle Financial Services | June 7, 2023
Banks are flooded with compliance requirements from multiple climate change and environment, social, and governance (ESG) reporting standards and frameworks. These standards and their implementation are critical in setting the pace and scope of changes to come—and the agenda for banks to catalyze positive change.
The Task Force on Climate-Related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), Climate Disclosure Standards Board (CDSB), and Global Reporting Initiative (GRI) are some of the more widely recognized organizations in climate change reporting. Banks and anyone keeping score, including investors and analysts, recognize the urgent need to standardize, reduce duplication in, and simplify ESG reporting.
In 2022, standards emerged from the Big Three: the International Sustainability Standards Board (ISSB), European Financial Reporting Advisory Group (EFRAG), and U.S. Securities and Exchange Commission (SEC). Since then, investors and banks globally have kept a close eye on the development of these climate change reporting standards. Let’s dig into major changes.
Upon careful deliberation, the ISSB board has made several changes to its sustainability reporting standard. Major updates are as follows:
After public consultation, the European Financial Reporting Advisory Group (EFRAG) has made a few changes to its standards, including:
|Large EU companies
|Other large companies
|Other listed SMEs
Both ISSB and ESRS have made several strides to ensure a wider acceptance of the climate change reporting standards, including the introduction of reliefs around Scope 3 emissions and implementation timelines. Meanwhile, the relevance of climate change reporting remains strong with disclosure requirements and general financial reporting to be included within the annual reports. Lastly, standard-setters must look for ways to reduce the burden of multiple reporting and continue working towards interoperability.