FSB publishes 2023 Progress Report on Climate-related Disclosures & 2023 TCFD Status Report

The FSB has published its 2023 Progress Report on Climate-Related Disclosures. The report welcomes the publication of the ISSB Standards, which will serve as a global framework for sustainability disclosures. The FSB will work with the ISSB, IOSCO, and other relevant bodies to promote the timely and wide use of the standards. The report also outlines progress made by jurisdictions in promoting climate-related disclosures, with all FSB jurisdictions either having requirements, guidance, or expectations in place, or having taken steps to do so.
The report also highlights the findings of the 2023 TCFD Status Report (see below), which shows that the percentage of public companies disclosing TCFD-aligned information continues to grow, but more progress is needed. The FSB has requested the ISSB to assume responsibility for monitoring progress on the state of climate-related financial disclosures by companies as of next year.
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In more detail, the 2023 Progress Report on Climate-Related Disclosures highlights significant progress made since October 2022 in setting comparable, consistent, and decision-useful climate-related financial disclosure standards and requirements. The ISSB has published its inaugural sustainability-related disclosure standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-Related Disclosures, which will serve as a global framework for sustainability disclosures.
The FSB will work with the ISSB, IOSCO, and other relevant bodies to promote the timely and widespread use of these standards. IOSCO has endorsed the ISSB Standards and calls on jurisdictions to consider ways to adopt, apply, or be informed by the standards within their jurisdictional arrangements. Interoperability of the ISSB standards with jurisdictional disclosure frameworks is crucial for achieving global comparability of climate-related disclosures.
Progress is being made on improving interoperability between the ISSB Standards and jurisdictional disclosure frameworks, with the ISSB and the EU working jointly to improve the interoperability of their respective requirements in the overlapping climate disclosure standards. The IAASB and IESBA have made substantial progress in developing a comprehensive global set of assurance, ethics, and independence standards to enhance the quality and reliability of sustainability-related information through third-party assurance. All FSB jurisdictions either have requirements, guidance, or expectations in place for climate-related disclosures or have taken steps to do so.
The 2023 TCFD Status Report shows that the percentage of public companies disclosing TCFD-aligned information continues to grow, with encouraging progress in companies‘ disclosure practices across various types of firms, including asset managers and asset owners, as well as non-financial companies. The ISSB’s inaugural Standards have been released, and the FSB has requested the ISSB to assume responsibility for monitoring progress on the state of climate-related financial disclosures by companies as of next year, which will help support the adoption of IFRS S1 and IFRS S2.
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Indeed, the 2023 TCFD Status Report highlights the progress made by companies in disclosing climate-related financial information and the challenges they face in doing so. The percentage of companies disclosing TCFD-aligned information has increased, but more progress is needed. For fiscal year 2022 reporting, 58% of companies disclosed in line with at least five of the eleven recommended disclosures, up from 18% in 2020, but only 4% of companies disclosed in line with all eleven recommendations.
The report also shows that the percentage of companies reporting on climate-related risks or opportunities, board oversight, and climate-related targets increased significantly between fiscal years, by 26, 25, and 24 percentage points, respectively. The majority of jurisdictions with final or proposed climate-related disclosure requirements specify that such disclosures be reported in financial filings or annual reports. Over 80% of the largest asset managers and 50% of the largest asset owners reported in line with at least one of the 11 recommended disclosures. The top challenge to climate-related reporting for both asset managers and asset owners is insufficient information from investee companies.
The report reflects on the TCFD’s work over the past eight years and highlights areas that warrant continued focus or further work by the ISSB or other appropriate bodies. These areas include ensuring interoperability of the ISSB Standards with jurisdictional frameworks, developing implementation guidance on various topics, focusing on companies‘ disclosure of the resilience of their strategies under different climate-related scenarios, and continuing to focus on decision-useful disclosures on other sustainability topics. Finally, the report emphasizes the need to develop a consistent climate-related financial disclosure framework for use by countries and other sovereign entities.