The International Organization of Securities Commissions (IOSCO) has today endorsed the ISSB standards (IFRS S1 and IFRS S2), calling on members to consider ways in which they might adopt, apply or otherwise be informed by the ISSB Standards.
IOSCO's formal assessment of the ISSB Standards was carried out between February and June this year, and the association of securities regulators said its work drew a careful distinction between "in-built provisions (on the face of the standards) for the permanent scaling of requirements, as well as in-built time-based transitional reliefs" and the "targeted areas where individual jurisdictions may consider additional time-limited transition relief, depending on their circumstances".
For the latter, IOSCO's technical assessment report noted these would be "time-limited". ISSB's Adoption Guide overview, also published today, qualified them as "brief extensions".
During a press conference held today, Corporate Disclosures asked IOSCO chair Jean-Paul Servais and ISSB chair Emanuel Faber what was understood as 'brief' or 'time-limited' and how the ISSB would monitor that process.
Servais replied: "Let us be clear, this was part of the discussion [between IOSCO and ISSB, to allow us] to perform a very fast assessment of the quality of the work produced. But this was one of the numerous questions I addressed to Emmanuel [Faber] and his board members [...] This is part of the journey, we know that [we are] starting from scratch, and to think that everybody could implement everything in a few months wouldn't be realistic".
He invited Corporate Disclosures to look through the adoption guidance overview to find some elements on the "brief aspect". A more attentive look at the guidance suggests that 'brief' means more than one year but as of now there are no suggestions of how long it could be.
Faber said: "What we have introduced in the dialogue with the board of IOSCO and the secretariat is a couple of places where there can be additional brief transitional reliefs for the regulatory adoption, the jurisdictional adoption."
"If we had had an answer to provide to you today about what brief means, I think you would have found it in the document," he added. "So, the notion of brief is precisely here to protect the collective ability of the community of regulators and us as the standard setters to discuss what brief means."
Faber highlighted that these reliefs, beyond those in the standards, were clearly intended to help IOSCO members who are new to the journey and jurisdictions who are not members of IOSCO to implement the standards.
"Only when we will have developed the contents of our capacity building programme more granularly for regulators and companies around the world, then we will be able to take stock of what brief means in that context," he concluded. "Depending on how ambitious countries are going to be and how ambitious the package of support and capacity building will be."
For now, the adoption guide overview suggests jurisdictions could extend the transition relief already embedded in the standards for the first year of reporting, for information beyond climate, the publication of sustainability and financial information at the same time and Scope 3 emissions.
These reliefs will help IOSCO to get a buy-in from its 131 members who are all at different stages in the so-called 'sustainability journey' but one could wonder if IOSCO's call to "adopt, apply or otherwise be informed by the ISSB Standards", combined with a set of relief options, that could create disparity in timeline and content, would not be a hurdle to the homogeneous adoption the ISSB craves.
Of course, the international standard setter would refute that, as it says its "adoption guide's ultimate objective is for IFRS S1 and IFRS S2 to be widely applied, while taking into account jurisdictional considerations on the application of the ISSB Standards". Before adding: "However, the ISSB also notes the need to achieve maximum consistency and comparability at the global level for the benefit of investors. The Adoption Guide will balance jurisdictional considerations about the phasing‑in of requirements with the need to deliver the comparability, consistency and reliability required by capital markets."
