The SEC’s final climate disclosure rule referred to and allowed use of the GHG Protocol, but also specifically declined to recognize the ISSB standards as an acceptable reporting regime. On Monday, that distinction became less relevant than the Commission originally intended. According to a press release from GHG Protocol:
“Greenhouse Gas Protocol (GHG Protocol) and the IFRS Foundation announced that they have signed a memorandum of understanding to guide future work and collaboration between GHG Protocol and the International Sustainability Standards Board (ISSB)… This memorandum of understanding (MoU) signals the commitment of both parties to work closely together to ensure compatibility and to ensure that the information provided meets the needs of capital markets. The purpose of the MoU is to set forth the general principles for cooperation and strengthened relations between the parties on the development of new standards and guidance…
The MoU puts in place governance arrangements so that the ISSB is actively engaged in updates and decisions made in relation to the GHG Protocol Corporate Standard. This includes the appointment of a representative of the ISSB as an observer on the GHG Protocol Independent Standards Board.”
This means that the GHG Protocol and ISSB won’t be quite so separate/distinct anymore. Should international ESG disclosure standards continue to consolidate under ISSB’s umbrella, one unintended consequence of the rule delay caused by litigation could be increased convergence/alignment with standards and frameworks with which the SEC differed. The Commission and staff may not like that, but it would ease the burden for companies forced to disclose the same thing under different reporting regimes.
Our members can find out more about the ISSB and GHG Protocol here.
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