Global Momentum Builds as Economies Advance Towards Adopting ISSB Standards

A significant portion of the global economy is moving to adopt or align with the sustainability disclosure standards issued by the International Sustainability Standards Board (ISSB).

According to the IFRS Foundation, which oversees the ISSB, jurisdictions representing nearly 55% of global gross domestic product (GDP) have announced steps to either use the ISSB's standards or fully align their sustainability reporting requirements with the global baseline established by the ISSB.

These jurisdictions account for more than 40% of global market capitalization and over half of total global greenhouse gas emissions.

The IFRS Foundation states that more than 20 jurisdictions have already decided to introduce the ISSB's standards into their legal or regulatory frameworks or are taking concrete steps in that direction.

Several major economies are pursuing full adoption or close alignment, including:

• The European Union, which passed legislation in 2022 requiring its sustainability reporting standards incorporate the ISSB standards to the maximum extent possible.
• China, where the Ministry of Finance recently issued draft sustainability standards formulated based on the ISSB's baseline and aligned with China's context.

Together, these 20+ jurisdictions account for around 75% of global market capitalization excluding the United States.

While the U.S. Securities and Exchange Commission (SEC) acknowledged similarities with the ISSB standards in its recent climate disclosure rule, it declined to recognize the global baseline as an alternative at this time.

Progress Since IOSCO Endorsement

The widespread momentum towards the ISSB standards follows the July 2022 endorsement by IOSCO, which called on its members representing over 95% of global capital markets to consider adoption or use of the standards.

To support this effort, the IFRS Foundation released its "Jurisdictional Guide" outlining pathways and tools for jurisdictions to adopt, partially adopt, or permit use of the ISSB standards based on their circumstances. The Foundation has also launched a regulatory implementation program to collaborate with IOSCO's emerging markets group and other organizations on education and capacity building initiatives.

With major economies and markets aligning, the ISSB standards appear on track to achieve the global baseline for climate and sustainability reporting sought by investors and other stakeholders.

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