It is now aligned with the recommendations of the task force on climate-related financial disclosures which require more detailed disclosure. There is also additional guidance on risk management, as well as a recommendation for companies to consider how resilient their strategies are to material environment risks associated with a 2°C or lower scenario, in line with the Paris Agreement on climate change and all the requirements stemming from it.

The CDSB framework is currently being used globally by companies with a market capitalisation of $5.2tn and helps organisations report climate change and natural capital information via their mainstream report.

CDSB has also released its five-year strategy, which aims to support enhanced corporate disclosures, lead to improved allocation of capital, thereby creating more sustainable financial and environmental systems.

Richard Samans, chairman of the Climate Disclosure Standards Board said: ‘The past decade has seen a fast-changing landscape for climate and environmental disclosure.

‘It is evident that investors need clear information on companies’ environmental performance in a way that is fully integrated with financial information to clearly understand business value.

‘The CDSB framework will help companies translate climate and environmental information into business impacts, creating more resilient and sustainable financial markets.’

The guiding principles are designed to ensure that environmental information in mainstream reports is material, useful to investors, correct and complete, and based on criteria that are suitable for conducting assurance activities.

The new framework is designed to encourage organisations to report material information that is based on relevant environmental information that reflect:

• factors specific to the reporting organisation; and
• environmental risks and opportunities to which all businesses are potentially exposed (for example, climate change) and are considered material for the purposes of the CDSB Framework.

The guiding principles are designed to ensure that environmental information shall be:

• prepared applying the principles of relevance and materiality;
• faithfully represented;
• connected with other information;
• consistent and comparable;
• clear and understandable;
• be verifiable; and
• be forward-looking.

In the early years of adoption, it is recognised that comparability of material environmental information between organisations and sectors may be limited, depending on development of common disclosure approaches, policies and practices.

However, within an entity, comparability over time should be achievable and depends primarily on the consistency of approach to reporting year-on-year. Companies to refer to the US Sustainability Accounting Standards Board’s (SASB) sustainability standards to understand material topics for specific sectors.

CDSB does not prescribe reporting provisions to be used for the preparation of quantitative environmental results. Instead, the CDSB Framework requires results to be prepared according to existing globally recognised reporting provisions for preparing measures, indicators and other information

Sara Lovisolo, group sustainability manager, London Stock Exchange Group said: ‘A streamlined and more focused approach to climate reporting will make it easier for companies to meet the highest standards of disclosure currently available.’

Simon Messenger, managing director, Climate Disclosure Standards Board said: ‘The message that the corporate sector has been sending to voluntary reporting organisations has been heard loud and clear: ensuring alignment and collaboration among the reporting frameworks and standards is critical to reach a tipping point in effective environmental reporting.

‘The aim of this update is to help companies understand how using the CDSB Framework helps them comply with current reporting requirements, including implementing initiatives such as the TCFD recommendations.’

The 43-page CDSB Framework for reporting environmental information, natural capital and associated business impacts

Report by Sara White