The following document details framework updates that occurred in August, as well as highlighting some key updates and releases to be aware of in the coming few years. Frameworks such as those explored in this report can help stakeholders understand how an organisation manages risks and opportunities around such sustainability issues. Often used as a communication tool, it can play an important role in demonstrating the sincerity of a company’s actions as well as ensuring good governance.
The global regulatory landscape has experienced exponential growth in the past few decades, with 647% increase in ESG regulations since the start of the 21st century. In June, global ESG regulations were found to have increased by 155% in the last 10 years. 1,255 ESG regulations have been introduced worldwide since 2011 yet to compare, only 493 regulations were published in the 9 years from 2001 to 2010.
August 2023 Update
The general observed trends within frameworks include a growing focus on disclosure, regarding both data and strategy, as well as an increased engagement of supply chains. Climate impacts are also seeing greater levels of inclusion into regulations and policies.
|UK SDS||UK SDS to set out corporate disclosures on the sustainability-related risks and opportunities that companies face, based on the Standards issued by ISSB in June.||2 August 2023|
|SBTi||The SBTi is getting ready to single out firms that have failed to follow up on climate pledges with official emissions reduction goals for approval by its reviewers.||3 August 2023|
|TNFD||TNFD has confirmed partnerships with 12 organisations including CDP, GRI and the SBT Network. The aim is to create a facility for publicly available nature-related data to help improve corporate resilience in the face of biodiversity loss and ecological risk.||11 August 2023|
Global Sustainability Assurance Standard
The standard setter IASSB is working with the European Commission to ensure ISSA 5000 meets the requirements for CSRD assurance. The IAASB issued its draft standard, the International Standard on Sustainability Assurance 5000 on 2 August 2023.
Taskforce Sets Out Suggestions for Embedding Nature into Financial Markets
The Taskforce’s recent report ‘Making Nature Markets Work’, suggestions aligning global economic and financial systems with an equitable nature economy and harmonising financial actions with government policies. Seven recommendations targeting the integration of nature and equity goals into global financial operations were unveiled on 10 August 2023.
Disclosure Through CDP Reveals Four in Five Cities Already Facing Climate Hazards
Data from 1,090 cities worldwide shows that four-fifths are already facing climate-related physical hazards in 2023. Half of the cities reported extreme heat during the past year. 35% of the cities said this resulted in drought, and 19% faced risks related to wildfires.
Science Based Target initiative Reports Growth in Targets Set
The SBTi has reported a sharp rise in companies setting science-based targets in 2022. 87% more businesses had their targets validated compared to 2021, totalling more validations than the entire previous seven years combined. Asia showed strong growth overall with a 127% increase in companies setting science-based targets in 2022.
Investment Giants Urge the ISSB to Develop Standards on Human Rights
21 investors collectively managing more than $1trillion of assets are urging the ISSB to prioritise the development of new reporting standards on human rights during its upcoming 2-year work plan, beginning in 2024.
|Mid-late 2023||SDR||Planned policy statement confirming SDR rules|
|Mid-late 2023||GRI||New GRI Biodiversity Standards expected to be published|
|Mid-late 2023||SEC’s climate-related disclosures||Issuance of a finalised Climate Disclosure rule delayed until ‘fall’|
|September 2023||GHG Protocol||Final draft of ‘Land Sector and Guidance’ document to be released in September 2023, along with associated data collection templates and calculation guidance|
|September 2023||TNFD||Final Version of the TNFD’s framework expected|
|October 2023||Transition Plan Taskforce||Final Disclosure Frameworks expected for the seven selected sectors guidance|
|November 2023||CSRD||EFRAG to propose a second draft of ESRS to the Commission that will include standards for sectors, non-EU companies, and listed SMEs; voluntary guidance for non-listed SMEs; amendment to the first draft to implement a cap on value chain emissions|
|2023||CDP||New questions to be released on biodiversity, requesting Board level oversight, public commitments, the impact of the value chain, actions to progress the topic, indicators and related publications|
|July 2024||CSRD||Anticipated adoption of the second draft of ESRS|
|July 2024||UK SDS||Secretary of State for Business and Trade will consider the endorsement of the IFRS Sustainability Disclosure Standards, to create the UK SDS|
|2024||CSRD||Due to supersede NFRD in 2024. Large companies already subject to NFRD must begin reporting on the fiscal year 2024.|
|2024||GHG Protocol||Expected to release drafts of revised text|
|2025||GHG Protocol||Final standards and guidance to be released|
Looking ahead, alignment of regulatory initiatives, harmonisation of targets and more standardised data will be needed to help improve transparency and enable companies to achieve their decarbonisation targets. The underlying principles new regulations and ratings due to align to are the ESRS and ISSB.
As a result, companies should be reviewing and aligning to the ISSB’s Standards and the ESRS. Initially, a gap analysis should be conducted to identify missing data and information as well as giving an opportunity to make roles and responsibilities clear to all personnel involved – upskilling may be required. Ensuing this, improving the accuracy of data should occur, accompanied by an internal report in preparation for public reporting once UK compliance requirements have been released.
How we can help
We can support you and your organisation navigate the complexities of voluntary and mandatory reporting, as well as the regulatory frameworks around sustainability. Please contact us to speak to one of our experts.
CDP – (formally) Carbon Disclosure Project
CSRD – Corporate Sustainability Reporting Directive
ESRS – European Sustainability Reporting Standards
GHG Protocol – Greenhouse Gas Protocol
GRI – Global Reporting Initiative
ISSB – International Sustainability Standards Board
MEES – Minimum Energy Efficiency Standard
SDR – Sustainability Disclosure Requirements
SBTi – Science Based Targets Initiative
TNFD – Taskforce for Nature Related Disclosure
UK SDS – Sustainability Disclosure Standards