ISSB ‘Harmonizes’ Global Sustainability Standards
It seems that the International Sustainability Standards Board (ISSB) makes a new announcement about ‘harmonizing’ corporate sustainability reporting every other week.?
The announcements came as the ISSB kicked off its two-year action plan at London Climate Action Week. New updates focussed on climate transition planning and GHG accounting, with the ISSB taking over the responsibilities of the TPT and releasing a Memorandum of Understanding with the GHG Protocol.
Alexander Bassen , Chair of the GHG Protocol Independent Standards Board (he also served on the EU Sustainability Reporting Standards Task Force), said, “This coordination between the IFRS Foundation and GHG Protocol is a momentous step in standardizing GHG reporting globally.”
The ISSB will be taking over the responsibilities of the UK Transition Plan Task Force (TPT), announced in 2021 at COP26. The move aims to reduce reporting fragmentation with climate transition plans, which are also included in the ISSB’s climate-related disclosure standard (IFRS 2). The IFRS Foundation (ISSB’s parent organization) will now assume responsibility for the disclosure-specific materials developed by TPT. Co-Chair Amanda Blanc said, “Today’s announcement that the ISSB will look to use the resources we have developed in the Transition Plan Taskforce is brilliant news and an important step towards greater consistency and clarity.”
These two new agreements were mentioned alongside previously announced agreements to align with the CDP, TNFD, and GRI - adding to the impression that ISSB is rapidly converging and harmonizing global sustainability standards.?
Regulation > Harmonization?
The European Financial Reporting Advisory Group (EFRAG - the group that established Europe's sustainability reporting standards - ESRS) also announced its increased commonality with the Taskforce on Nature-related Financial Disclosure (TNFD). Releasing a mapping tool that shows where the TNFD and European Sustainability Reporting Standards overlap.
Although the ESRS and ISSB recently announced a high level of interoperability, companies are grappling with the practical reality of mandated reporting of their sustainability results. Thousands of companies are currently preparing their inaugural reports as required by the Corporate Sustainability Reporting Directive (CSRD), which requires the application of the European standards (ESRS). Plus, Switzerland just announced that it would expand its sustainability reporting regulations from 300 to 3,500 and require companies to report using the ESRS or an equivalent.
The compliance imperative, combined with the more comprehensive coverage of the ESRS (12 standards vs. the ISSB’s two, double materiality instead of single), is resulting in corporations applying the European approach and assuming it will cover other compliance obligations.?
The End of Science-Based Policy?
The “Chevron deference” has been a US legal precedent for 40 years, but that could all change this week. The US Supreme Court is set to release a decision by Friday on the 1984 ruling that directed judges to defer to agencies' expertise on ambiguous laws.
The conservative majority Supreme Court is expected to alter the Chevron deference, but whether they weaken it or overturn it is still to be determined. If it is overturned, it would mark a paradigm shift in how federal agencies make rules, especially environmental and climate rules. Jody Freeman of Harvard Law’s environmental and energy law program said. “Every legal interpretation agencies make will be more vulnerable because they will lose the ‘presumption of regularity’ or the benefit of the doubt the government normally gets, which is what deference is all about.”
However, other experts think it will emerge from the Supreme Court largely unscathed. Ron Levin of Washington University said, “My prediction is that Chevron will be largely maintained with minor tweaks, which’ll be described as clarifications.”?-- UPDATE: News just broke that the precedent has been overturned. We will cover the implications next week.
The Supply Chain Scope 3 Challenge
To put the challenge into perspective, Scope 3 upstream emissions account for 26 times the emissions of Scope 1 and 2, yet only 15% of companies reporting to CDP have set upstream Scope 3 targets.
For effective management of Scope 3, corporations should focus on three key strategies: fostering a climate-responsible board, enhancing supplier engagement, and implementing an internal carbon price. Investors should be pricing in the financial risk of Scope 3 and demand that their portfolio companies share their climate-related data.?
Another CDP report revealed that the number of companies setting 1.5C-aligned climate transition plans through the CDP jumped by more than 40% last year. The number of companies setting decarbonization plans increased from 4,100 to 5,900, representing 26% of companies reporting to the CDP, and a further 36% said they will have plans in place by 2025.
Hawaii Climate Case?
Thus far, 2024 is the year when climate went to court, with dozens of precedent-setting cases ongoing and finalized. This week, another ‘groundbreaking case’ culminated, becoming another victory for youth-led lawsuits.?
A group of Hawaiian children supported by Our Children’s Trust, (the same group that won in a similar case in Montana last year) sued the state’s Department of Transportation for violating Hawaii’s Constitution, which guarantees the “right to a clean and healthful environment” by overusing fossil fuels.?
The settlement requires the state to reduce emissions from transportation, to which the state said it would make a plan to decarbonize the state's transport within 20 years and, in the short term, expand bicycle lanes and begin investing in EV infrastructure. Hawaii’s Governor Josh Green said, “The passion demonstrated by these young people in advocating for a healthy, sustainable future for their generation and those to come, is laudable.”
Heat Deaths Mount
Heat-related deaths continued to mount this week, with the death rate in Saudi Ariabia’s Hajj pilgrimage reaching more than 1,300. Scientists warn of more to come with suggestions that 2024’s summer could be the hottest ever.?
Friederike Otto, climate science at Imperial College London, said, “dangerous heat is hitting larger regions of the world for many more days of the year… this summer could become the hottest ever recorded, even with El Ni?o fading and shifting to La Ni?a”
As the heat continues to climb in the decades to come, it will lead to us changing how we hold events, exacerbate the housing crisis, and will inevitably have an increasingly negative effect on human health.
The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer.?
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