82% of global companies respond to climate disclosure initiative, FSB emphasizes the need to improve disclosure integrity

Recently, the Financial Stability Board (FSB) released its latest "Climate-related Financial Disclosure Progress Report", which provides a detailed analysis of achievements around the world in applying the disclosure standards developed by the International Sustainability Standards Board (ISSB). This report combines the results of questionnaires from FSB member jurisdictions and incorporates recommendations from a number of major standard-setting bodies and international organizations to provide a comprehensive picture of the current global progress in climate-related financial disclosures.

Key developments at this stage:

The report notes that 19 of the 24 FSB member jurisdictions have enacted legislation, strategic roadmaps or specific guidance on climate-related disclosures. In addition, 17 jurisdictions have introduced or are promoting disclosure requirements consistent with the ISSB standards and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which shows the increasing acceptance of the ISSB standards globally.

Currently, 82% of global companies have disclosed relevant information that meets at least one TCFD recommendation, which shows that global companies are actively participating in climate information disclosure, but only less than 3% of companies meet all 11 TCFD recommendations. This lack of disclosure means that key climate-related governance, strategy, risk management and measurement information has not been fully disclosed, preventing investors from fully assessing climate risks and opportunities. ISSB Chairman Emmanuel Faber said: "This progress report highlights the significant and encouraging progress in climate-related information disclosure. However, investors still do not have complete information to correctly assess and price climate and other sustainability-related risks and opportunities, which shows that we still need further action."

Global efforts to advance standards implementation:

The current global focus is on supporting jurisdictions to adopt and integrate the disclosure standards to be released by the ISSB in 2023. The FSB pointed out that several organizations, including the ISSB, are actively working to promote capacity building and provide specific implementation support, especially for special groups such as small and medium-sized enterprises (SMEs) and emerging market and developing economies (EMDEs), to help them overcome the unique challenges in disclosing climate-related information.

Fabe emphasized: “Incorporating sustainability-related disclosure requirements into the regulatory framework through the adoption of ISSB standards or otherwise promoting these standards not only builds on the foundation laid by the TCFD recommendations, but also further establishes a more comprehensive and verifiable set of disclosure requirements, which is critical to the stable operation of global capital markets.”

Challenges faced and assurance measures:

This report also provides an in-depth analysis of the challenges faced by various jurisdictions in implementing ISSB standards. The FSB pointed out that companies and small and medium-sized enterprises in some emerging markets and developing economies have particularly obvious challenges in implementing standards, so the report calls for more targeted measures to help these groups. To this end, the FSB and relevant international organizations are cooperating to launch a series of policies, including customized implementation guidance and technical support, to ensure that the standards can be widely implemented.

In addition, several jurisdictions are already actively introducing assurance requirements to improve the reliability and transparency of climate-related disclosures so that investors can have greater trust in these disclosures. The report specifically cites the International Financial Reporting Standards (IFRS) Foundation's Corporate Climate-related Disclosure Progress Report, whose conclusion is clear: "Companies have made encouraging progress in disclosing climate-related financial information using TCFD recommendations or ISSB standards, but further efforts are still needed to improve disclosure levels."

Future development directions:

The FSB report pointed out that the world has made important progress in aligning sustainability disclosure frameworks and integrating financial and prudential reporting requirements, but further improvement of policy uniformity and application scope of standards is needed. To further achieve this goal, the FSB will continue to promote international harmonization, especially in developing more precise disclosure standards, improving assurance requirements and enhancing transparency. This coordinated push will effectively consolidate the global framework for sustainability disclosure and provide global investors with more comprehensive information to better assess and respond to climate risks and opportunities.

Accountant Lai Yuwei of Scishare Sustainability Consulting Services said that the gradual increase in acceptance of ISSB standards around the world is a good sign. However, it can be seen in many news that the lack of completeness of disclosure is a major problem. This problem arises from three major aspects: In addition to the fact that most governments do not have legal coercion in the disclosure framework, stakeholders do not pay much attention to greenhouse gas effects and climate issues. One of the reasons is also the reason.

These emerging laws and regulations have left many small and medium-sized enterprises, and even large enterprises, with no reference materials to help them disclose. Sustainability consulting companies or government organizations can respond to this problem by assisting small and medium-sized enterprises in providing guidance and indicator inspections on sustainability reports. Taiwan's small and medium-sized enterprises can be said to be the main force of Taiwan's economy. In addition to assistance, the government's policy promotion and financial subsidies are very important. The higher the public's familiarity with the issue, the more familiar it will be for companies and stakeholders to understand the content of the issue, and they will be able to exert more direction in disclosing climate issues and formulating financial reports.