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CFOs React to ISSB Standards

Published Date:
Jul 10, 2023

Now that the International Sustainability Standards Board (ISSB) has released its first two standards, American CFOs are waiting for more guidance from other regulators, The Wall Street Journal reported.

The Securities and Exchange Commission (SEC) is working on proposed rules for climate-related disclosures, for which it has received comments from investors, companies and lawmakers, while the European Union (EU) may require more disclosures from U.S. companies.

“There are lots of different efforts afoot, and while there’s also cooperation, generally speaking, or collaboration, across these different standards-setting bodies, there’s no one process and there’s no one uniform rule,” Debbie Clifford, chief financial officer at software company Autodesk, told The Journal. She said that her company would need to determine how the ISSB standards may compare or interact with what may come from the SEC and the EU, a challenge that other companies may face. 

One concern companies expressed during the development of the ISSB’s standards was that of revealing information that could put them at a competitive disadvantage. Another was about complications related to reporting on Scope 3 emissions, which include those from suppliers, in addition to their own emissions. Recognizing the challenges, the ISSB gave companies an exemption of one year for reporting on Scope 3 emissions. 

“Scope 3 is the tough one,” digital infrastructure company Equinix CFO Keith Taylor told The Journal. “We’re building systems and processes that can allow us to capture information in a way that will help us respond to the needs of the regulatory community, the needs of our customers, the needs of the social environment in which we operate.”

Australia, Canada, Japan, Hong Kong, Singapore and the U.K. are among the major countries that have indicated they would consider using the ISSB standards, according to The Journal. Many others are expected to adopt the new guidelines, and companies can voluntarily adopt the standards.

Mars Inc. finance chief Claus Aagaard told The Journal that, given the unlikelihood of one set of globally aligned sustainability reporting standards, “the best alternative is a global baseline for investors that can be built upon with disclosures for other stakeholders.”

“It’s very, very early days,” Taylor said of the ISSB’s standards. “But it does feel like it’s a good first step.”

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