Market Insights

The IFRS Sustainability Symposium 2024, held on February 22nd at the Javits Center in New York City, was a forum for investors, corporates, advisors, regulators, and policymakers from over 51 jurisdictions to discuss the necessity of having quality sustainability-related financial data for various investment styles. The symposium offered a full day of keynotes, panel sessions, and networking opportunities. 

An IFRS Alliance members-only workshop the day prior was a particular highlight, serving as an invaluable platform for sharing experiences, gaining practical insights, and understanding the evolving landscape of sustainability-related financial disclosures. Attendees on both days included a diverse group, including companies ready to implement ISSB Standards, ESG service and data analytics providers, and investors, all converging to discuss the future of sustainability disclosures.

Keynote speaker Brian Moynihan of Bank of America summed it up perfectly, 

“The ISSB is delivering a global reporting standard...that will allow for transparency and comparability...just what we’ve been seeking for sustainability-related disclosure.” – Brian Moynihan at the IFRS Sustainability Symposium 2024 in New York City

He is an advocate for adopting the ISSB Standards as a strategic approach, considering it a "no regrets" option for navigating global markets while we await regulatory clarity. RPIA’s own ESG integration process is built on the SASB materiality maps, a foundational tool that guides the ISSB disclosure standards. 

The insights from the IFRS Sustainability Symposium were timely in light of recent decisions by the U.S. Securities and Exchange Commission (SEC) on climate disclosure regulation. On March 6th, 2024, the SEC voted to approve changes to rules regarding the inclusion of climate-related risk disclosures, including Scopes 1 and 2 GHG emissions, as well as climate-related targets or goals in registration statements and annual reports. The primary adjustments from the March 2022 proposal, which include the exclusion of Scope 3 emissions reporting, the introduction of a materiality threshold, and exemptions for smaller firms, were largely anticipated by industry participants. 

While facing criticism for being both overly prescriptive and insufficiently rigorous, the rule changes are a pivotal move toward integrating climate-related disclosures into public filings, which enhances investor insight into material climate risks and metrics. Effective dates for large accelerated filers, the first group of companies impacted by the rules, include inclusion of material or likely material climate-related risks by FY2025, and Scopes 1 and2 GHG emissions disclosures by FY2026.

In the European Union, the Corporate Sustainability Reporting Directive (CSRD) has already been in effect since January 5, 2023, with entities being phased into compliance from this year through 2028, depending on various characteristics, including total assets, net turnover, and number of employees. In the short term, the CSRD aims to improve the disclosure process and empower better-informed decisions with the longer-term goal of reducing climate risk and improving EU sustainability. 

Across regions, these regulations are anticipated to be a once-in-a-generation overhaul in terms of scale and importance. We are following closely as these evolutions continue to guide us in our own approach to incorporating deeper sustainability analysis for ESG integration within our investment process.

Sources:

https://www.ifrs.org/news-and-events/events/2024/february/ifrs-sustainability-symposium/

https://www.reuters.com/business/finance/us-sec-vote-long-awaited-climate-disclosure-rule-notice-says-2024-02-28/

https://www.cdsb.net/what-we-do/policy-work/eu-sustainability-reporting 

US Securities and Exchange Commission

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