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HomeTopicsEnvironment and WildlifeCosta Rica, Brazil, Bolivia Spearhead Climate Accounting Adoption

Costa Rica, Brazil, Bolivia Spearhead Climate Accounting Adoption

Dozens of countries, including Brazil, Bolivia, and Costa Rica, adopt common carbon accounting standards. A total of 21 countries, including Brazil, Bolivia, and Costa Rica, or jurisdictions covering many states, will adopt common extra-financial accounting standards on climate for their companies, the body that already manages the IFRS financial accounting standards, applied in 140 countries and jurisdictions, announced on Tuesday.

China, the largest emitter of greenhouse gases, released a draft on Monday based on the first two standards of the International Sustainability Standards Board (ISSB), a branch of the IFRS. The objective of the ISSB is to allow investors to have reliable data to know if they are investing in companies highly exposed to climate risk and how their stock portfolios may be affected.

The new ISSB climate standards will also be applied in Bolivia, Brazil, Costa Rica, Canada, Australia, Bangladesh, Hong Kong, Japan, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Kenya, Nigeria, Turkey, the United Kingdom, and the European Union.

In total, they represent about 55% of the world’s GDP and more than half of the world’s greenhouse gas emissions. “It’s difficult to go faster,” Emmanuel Faber, chairman of the ISSB, told AFP, recalling that the initiative was launched in 2021 and that the standards were finalized only in June 2023.

Japan is expected to fully comply with the standards developed by the ISSB, but countries will be able to adapt them, and the EU plans for its own standards, which will apply to more than 40,000 companies, to be easily compatible with those of the ISSB.

Implementation will be gradual. Brazil, for example, will not make them mandatory until 2026. In China, probably some of the tens of thousands of the most important companies will do so at first, Faber points out. The goal is to cover those that represent the majority of the economy to have a real impact on the climate transition through financial markets, he insists.

The United States will not align with the ISSB for the time being. But Faber bets that the gradual adoption of international standards worldwide, and future Californian legislation, will encourage U.S. companies to join.

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