Regulatory Briefing: Net-Zero Asset Owner Alliance pushes for tighter ISSB disclosure standards

The influential UN-convened Net-Zero Asset Owner Alliance wants proposals for a global baseline for climate-related disclosures tightened up, including the separate reporting of methane emissions. The NZAOA – a group of 74 leading institutional investors managing $10.6tn in assets – also maintains that different industry metrics are required from the most energy-intensive sectors, including oil and gas.

The NZAOA comments come in response to the consultation launched by the International Sustainability Standards Board, which developed the important global baseline proposals.

Creating “fit for purpose” ISSB standards. NZAOA welcomes what it calls the “landmark opportunity” presented by the ISSB proposals to produce standardised, comparable and granular disclosure from companies. But it adds that there are points to resolve before arriving at “a fit-for-purpose ISSB standard”. NZAOA recommends the “ISSB goes further to ensure the consistency and appropriate granularity of disclosures, even for a global baseline”.

For example, as 90 per cent of the world’s GDP is covered by net zero promises, the NZAOA says the ISSB should expressly integrate this into transition plans and target-setting in countries covered by government net zero pledges.

Additional disclosure standards. NZAOA suggests that additional disclosure requirements should be incorporated into transition plans, such as agreed near-term actions to deliver on the underlying strategy. A common target-setting template is recommended and climate scenario analysis should be required, it says.

Furthermore, NZAOA suggests that the ISSB should require different disclosures of industry metrics for the 12 most energy-intensive sectors listed by the standard setter. Among these are agriculture, aviation, cement, steel, shipping and construction.

Finally, methane should not be aggregated into CO₂ emissions. There should instead be a disclosure of the measure of methane volume per metric ton and of methane intensity in the oil, gas and utility sectors, says NZAOA.