PwC Malaysia lauds ISSB announcement: A significant step forward towards globally aligned reporting

The creation of the International Sustainability Standards Board (ISSB) is one of the most important developments from the 2021 United Nations Climate Change Conference (COP26). IFRS Foundation’s announcement heralds a shift in reporting practices, towards globally consistent standards, presenting opportunities for more harmonised sustainability reporting.  

For preparers and users alike, this is a much welcomed move that is expected to address the multiple ESG reporting frameworks and practices that have created complexities and confusion, and hindered comparability in sustainability reporting. 

We are pleased that the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF, including the Integrated Reporting Framework and the SASB standards) will be consolidated into the Board by June 2022. This is aligned with the convergence agenda that PwC as a firm globally has been advocating. 

We are confident that this convergence will enable the ISSB to leverage existing standards, creating an opportunity for policymakers to build upon and align with the global sustainability standards issued by the ISSB. 

What this means to businesses in the ASEAN region

Companies in this part of the world are at an important crossroads amidst increasing regionalisation, especially with the Regional Comprehensive Economic Partnership (RCEP) coming into force in January 2022. 

Regulators are in a unique position to harness the good work done globally in the field of sustainability reporting, to customise to local needs. The prototype standards based on the work of the Technical Readiness Working Group (TRWG), a precursor to the ISSB, is a good starting point to help all parties prepare for the standards when released. 

As part of the diverse ASEAN region, companies in Malaysia will be impacted differently by the harmonisation of standards in an increasingly cross border landscape. Climate change in particular, is a pressing issue confronting businesses in various industries, exacerbated by the COVID-19 pandemic. 

Guidance on what disclosure items are required will be much welcomed - again another opportunity for regulators to facilitate the development and calibration of reliable ESG data sets and disclosures, which can be used by investors, boards and other stakeholders. A balance will need to be struck between being prescriptive while providing sufficient guidance on how to determine disclosure items based on their materiality. 

In addition, companies will increasingly need to seek independent, external assurance on sustainability data, as building blocks to earn trust. With trust becoming increasingly difficult to earn, investors will be demanding greater insight through reporting, building the case for integrated thinking, versus a ‘check-box’ boilerplate approach to disclosures. 

By reflecting how value is created, preserved or eroded for the business through improved reporting, companies will be able to craft a new narrative of what doing good and sustainable business is. Beyond increasing competitiveness and improving the economy through a collective effort in corporate reporting, this paves the way for a better tomorrow for the community and the wider society. 

Herbert Chua, Sustainability and Climate Change Reporting Leader, PwC Malaysia, and Pauline Ho, Net Zero Lead Partner, PwC Malaysia

ENDS