Sustainability Policies and Practices for Corporate Governance in Latin America

Annex A. Climate-related and other ESG reporting frameworks and standards

Table A.1. Frameworks and standards

Institution	System	Level of detail	Materiality1	Audience	Issues
FSB’s TCFD	TCFD recommendations	Principles‑based2	Financially material	Investors, lenders and insurance underwriters	Climate‑related issues
IFRS Foundation – International Sustainability Standards Board (ISSB)3	IFRS Sustainability Standards2	Detailed information	Financially material	Investors	Initial focus on climate‑related issues, but with a plan to cover a great number of ESG issues
Value Reporting Foundation – SASB Standards Board4	SASB Standards	Detailed information	Financially material	Investors	A great number of ESG issues, with subset of standards in each of 77 industries
Value Reporting Foundation – Integrated Reporting Framework Board4	< I.R.> Framework	Principles‑based	Financially material	Investors	A great number of ESG issues
Global Sustainability Standards Board (GSSB)	GRI Standards	Detailed information	Double materiality	Multiple stakeholders	A great number of ESG issues, with a plan to have a subset of standards in each of 40 sectors
GHG Protocol	GHG Protocol Corporate Standards	Detailed information	‑5	‑5	GHG emissions4
CDP (previously “Carbon Disclosure Project”)	CDP questionnaires5	Detailed information	‑6	Investors and customers	Climate change, forests and water security5
Climate Disclosure Standards Board (CDSB)7	CDSB Framework	Principles‑based	Financially material and relevant8	Investors	Climate and other environmental information

Notes:

¹ Corporate disclosure is "financially material" if it could reasonably be expected to influence an investor or a lender's analysis of a company's future cash flows. A "double materiality" concept incorporates what is financially material, but it also includes within its scope information that would be relevant to multiple stakeholders' understanding of a company's effect on the environment, on people or society (e.g. for consumers and employees).

² While TCFD’s recommendations (TCFD, 2017[27]) are indeed principles‑based, the Task Force has published a number of documents providing detailed guidance on how to better comply with its recommendations, such as the report “Guidance on Scenario Analysis for Non‑Financial Companies” (TCFD, 2020[28]). To some extent, therefore, this set of recommendations and guidance documents on how companies may disclose financially material information, preferably in mainstream financial filings, would together demand “detailed information” according to the classification in the third column of this table.

³ IFRS Foundation announced in November 2021 the formation of the International Sustainability Standards Board ("ISSB"), which now sits alongside the International Accounting Standards Board ("IASB"), to set IFRS Sustainability Disclosure Standards. In the same opportunity, IFRS Foundation committed to consolidating with the Value Reporting Foundation Board and CDSB by June 2022. IFRS Foundation's recently amended constitution provides that IFRS Sustainability Disclosure Standards "are intended to result in the provision of high‑quality, transparent and comparable information […] in sustainability disclosures that is useful to investors and other participants in the world's capital markets in making economic decisions" (item 2.a).

⁴ SASB Standards Board and Integrated Reporting Framework Board ("< I.R.> Framework Board") merged in June 2021 into a new organisation called Value Reporting Foundation Board ("VRF"). In July 2022, the VRF consolidated into the IFRS Foundation.

⁵ GHG Protocol's corporate accounting and reporting standard provide requirements and guidance for companies preparing a corporate‑level GHG emissions inventory. It does not adopt a materiality concept, and other ESG reporting frameworks and standards will typically either require or allow GHG emissions to be disclosed according to GHG Protocol's standard. In this standard, GHG emissions are classified under three categories: scope 1 (direct emissions from a company's own operations); scope 2 (emissions from purchased or acquired electricity, steam, heat and cooling); scope 3 (the entire chain emissions impact from the goods the company purchases to the products it sells).

⁶ CDP's questionnaires would not be considered a reporting framework or standard in the traditional sense, but the institution offers a widely used system for companies to answer to any of the following questionnaires: Climate Change; Forests; Water Security. The questionnaires are meant to be disclosed to (i) investors or to (ii) customers interested in assessing the environmental impact of their supply chain. Corporate management is not supposed to make a materiality assessment of the information to disclose, because CDP offers a set of questions by economic sector and companies have strong incentives to answer all of them in order to receive better scorings calculated by CDP's system. Questionnaires are shortened only for companies with an annual revenue of less than EUR/USD 250 million and corporates answering the questionnaire for the first time.

⁷ In January 2022, the CDSB consolidated into the IFRS Foundation.

⁸ According to the CDSB Framework, environmental information should be disclosed if financially material or relevant. “Relevant” in this context would be information that might be financially material at some point, while the link between the information and future cash flows is not evident. In either case, GHG emissions shall be reported in all cases regardless of management’s assessment of their materiality or relevance (CDSB, 2019[29]).

Source: Standards, frameworks and websites of the institutions visited in July and November 2021, as well as in January and July 2022; OECD elaboration.