The UK government has announced plans to adopt the International Sustainability Standards Board (ISSB) sustainable disclosure standards. This move aims to attract global investors and enhance the UK’s standing as a global financial centre by demonstrating its commitment to robust sustainability reporting practices.
There has been a global push towards reporting on the environmental risks faced by companies over recent years. However, this has been hampered by a lack of standardisation around what should be included in reports and inconsistent methodologies. This has resulted in a divergence between how sustainable an investment may appear and its actual performance, which in turn makes it difficult for investors to determine the real environmental impact of an investment and make informed choices.
The ISSB is an initiative to develop globally consistent sustainability disclosure standards. These standards provide a framework for companies to disclose ESG factors, standardising reporting and consequently ensuring investors can make better informed decisions based on the environmental impact of a company.
The UK government aims to have its version of the ISSB standards ready by July 2024, deviating from the global standards only if necessary for UK-specific matters. Simultaneously, the Financial Conduct Authority is aligning its climate-related disclosure with ISSB standards, with the policy expected to be finalised by the end of 2024, including guidance on listed company transition plan disclosures.
