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International Sustainability Standards Board announced

Defining Issues | November 2021

ISSB to address growing demand for global ESG disclosure standards; SEC proposals expected early 2022.

As US public companies await climate and other ESG disclosure proposals from the SEC, the IFRS® Foundation has officially announced the formation of a new International Sustainability Standards Board (ISSB). We provide background on the ISSB and its consolidation with other leading organizations, and explain what this means for US companies awaiting the SEC proposals.


IFRS Foundation press release

  • US companies monitoring international ESG reporting developments

Key Impacts:

The new International Sustainability Standards Board (ISSB) will aim to develop sustainability disclosure standards that are focused on enterprise value.

The IFRS Foundation is aiming to put sustainability reporting on the same footing as financial reporting by establishing a sister body to the International Accounting Standards Board (the IASB® Board). The goal is to drive globally consistent, comparable and reliable sustainability reporting using a building blocks approach. This approach will allow national and regional jurisdictions to build on that global baseline to set supplemental standards that serve their specific jurisdictional needs.

SEC Chair Gary Gensler has clearly indicated that the SEC’s proposals will be focused on the needs of US markets. However, this does not necessarily signal a lack of support for the work of the ISSB. In particular, consideration of the work of the Task Force on Climate-related Financial Disclosures is clearly in the thinking of both the SEC and the IFRS Foundation, which could mean that climate-related disclosures converge over time with a global baseline emerging.

"Today's announcement by the IFRS Foundation advances the march towards ESG engagement on a more global scale. At KPMG, we support the development of a baseline global ESG reporting standard to reduce complexity and achieve greater relevance, consistency, reliability, and comparability in ESG reporting. This announcement serves the capital markets by helping investors achieve their ESG goals that will power global solutions to societal challenges. It also underscores the need for companies to prepare now. Embedding ESG engagement throughout one’s organization and transformation requires scenario planning, materiality assessments, strategy, operations, assurance, and more. It demands an all-hands mentality to meet this all-hands moment".
— Scott Flynn, Audit Vice Chair

See Scott’s recent op-ed on ESG for more: Get Ready for ESG on a Global Scale - FEI (

Which organizations are contributing directly to the ISSB and IFRS Sustainability Disclosure Standards?

The ISSB will benefit from the consolidation of global bodies (CDSB, IIRC and SASB) – as well as the support of IOSCO, TCFD and WEF – that share the aim of enterprise value-focused sustainability disclosures.1

Under the governance of the Foundation, the ISSB will work closely with the IASB Board, reflecting the importance of connectivity with financial reporting.

Many companies (and jurisdictions) are already using the work of these bodies. For example, companies that have already adopted the TCFD recommendations on climate-related financial disclosures will be well positioned to use its disclosures as a bridge to the adoption of the new standards.

1. Climate Disclosure Standards Board (CDSB), International Integrated Reporting Council (IIRC), International Organization of Securities Commissions (IOSCO), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), World Economic Forum (WEF)

What will be the ISSB’s first priorities and deliverables?

In preparation for the new board, the Foundation formed a Technical Readiness Working Group (TRWG) to create prototypes to give the new board a running start in developing its first two exposure drafts. These prototypes have been released and cover:

  • climate-related disclosures, building on the TCFD recommendations and SASB industry-based standards; and
  • general sustainability disclosure requirements.

The ISSB will consider these prototypes in its work program. The climate-related disclosure standard is expected to be the first of a proposed suite of sustainability disclosure standards issued by the ISSB, including standards on broader sustainability topics. 

The head start provided by the TRWG means that development of these standards is likely to be accelerated, with shorter comment periods and redeliberation stages.

What does the ISSB mean for US companies?

SEC guidance released in 2010 highlighted climate-related matters that may be relevant when considering various Regulation S-K disclosure requirements; in February this year, the SEC announced that the staff would review the extent to which registrants address the topics identified in the 2010 guidance. This was followed in September by questions to certain registrants about their climate-related disclosures.

In addition, principles-based disclosures about human capital came into effect in 2020 as part of the SEC’s modernization efforts.

In June this year, the SEC’s regulatory agenda included proposals for climate risk, human capital and cybersecurity risk disclosures. To help the staff develop proposals, then-Acting SEC Chair Allison Herren Lee issued an informal request for public comment in March that closed mid-June; the consultation mainly related to climate disclosures. 

SEC Chair Gary Gensler has spoken about the support expressed for the TCFD disclosures and their endorsement by leading ESG organizations. He noted that he had “asked staff to learn from and be inspired by these external standard-setters” but cautioned that the SEC should write rules and establish a disclosure regime appropriate for US markets.2

Although the SEC is clearly focused on the needs of US markets, this does not necessarily signal a lack of support for the work of the ISSB. In particular, consideration of the work of the TCFD is clearly in the thinking of both the SEC and the IFRS Foundation, which could mean that climate-related disclosures converge over time with a global baseline emerging.

2. Chair Gary Gensler, “Prepared Remarks Before the Principles for Responsible Investment ‘Climate and Global Financial Markets’ Webinar,” U.S. Securities and Exchange commission, July 28, 2021,

What do we know about the SEC proposals?

The SEC plans to issue proposals in three areas: climate change, human capital (in particular, diversity) and cybersecurity risk governance. The proposals are expected toward the end of 2021 or early 2022 (likely the latter).

In public remarks, SEC Chair Gensler has indicated that he has asked the staff to consider proposals in at least the following areas.


  • Whether the disclosures should be filed in Form 10-K
  • Qualitative disclosures – e.g. how company leadership manages climate-related risks and opportunities, and how these factors feed into the company’s strategy
  • Quantitative disclosures – e.g. greenhouse gas emissions, financial impacts of climate change, progress toward climate-related goals
  • Whether there should be metrics for specific industries – e.g. banking, insurance, transportation
  • Whether companies should provide scenario analyses on how a business might adapt to the range of possible effects of climate-related changes (e.g. physical, legal, market, economic) that it might need to contend with in the future
  • Which data or metrics companies might use to inform investors about how they are meeting their emission reduction goals or jurisdictional requirements
  • Whether fund managers should disclose the criteria and underlying data they use in marketing themselves as green, sustainable or low-carbon etc

Human capital3

  • Workforce turnover
  • Skills and development training
  • Compensation and benefits
  • Workforce demographics including diversity
  • Health and safety

Cybersecurity risk governance4

  • Cyber hygiene
  • Incident reporting

Boardroom diversity

In addition, the SEC’s regulatory agenda includes corporate board diversity, and in August the SEC approved new NASDAQ diversity rules.

2. Chair Gary Gensler, “Prepared Remarks Before the Principles for Responsible Investment ‘Climate and Global Financial Markets’ Webinar,” U.S. Securities and Exchange commission, July 28, 2021,

3. Chair Gary Gensler, “Prepared Remarks at London City Week,” U.S. Securities and Exchange commission, June 23, 2021,

4. Chair Gary Gensler, “Prepared Remarks Before the Asset Management Advisory Committee,” U.S. Securities and Exchange commission, September 27, 2021,

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Julie Santoro
Partner, Dept. of Professional Practice, ESG, KPMG US

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