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COMPLIANCE In 2023, companies will face greater multinational climate-related disclosure requirements. Throughout 2022, regulators in the United States (U.S.), the United Kingdom (UK), Canada, and the European Union (EU) took action to enhance and synchronize ESG reporting standards globally. New legislation and disclosure standards aim to make corporate sustainability reporting more common, consistent, and standardized like financial accounting, ultimately eliminating the alphabet soup of standards, while also mitigating the risk of misrepresentation, perceived as greenwashing, in financial markets. Standards expected to be published: early 2023 The ISSB and the Global Reporting Initiative (GRI) are working together to drive the consistency and compatibility of investor-focused baseline sustainability information, while also including broader stakeholder concerns The formation of the ISSB was announced at COP26, the United Nations global summit to address climate change in November 2021. ISSB sits alongside the International Accounting Standards Board (IASB) ISSB will issue sustainability reporting standards with an objective of delivering a global baseline of sustainability disclosures that satisfy capital market needs. Individual jurisdictions will subsequently decide to require or permit application of ISSB standards as a basis for sustainability reporting, similar to the process for adopting IFRS for financial reporting ISSB (International Sustainability Standards Board) proposal A final rule expected: at the beginning of 2023 after delays in the comment period have postponed its adoption The SEC issued a proposal in March 2022 that would significantly enhance climate- related disclosures in annual filings and registration statements. The proposal focuses specifically on how climate risks are identified, assessed, managed, and disclosed; the financial impact of severe weather and other natural events as well as transition activities; and greenhouse gas emissions (GHG) SEC proposal EU regulations and disclosure proposal Adoption expected: mid 2023 The EU regulations are part of the Corporate Sustainability Reporting Directive and require entities to provide mandatory sustainability disclosures. The scope of the CSRD will include EU subsidiaries of non-EU parent companies, including US companies and other global multinational companies. The directive resulted in the development of the European Sustainability Reporting Standards (ESRS), as proposed by the European Financial Reporting Advisory Group (EFRAG). The ESG disclosure mandates of this regime will be much more comprehensive than that of the SEC or ISSB The SEC's focus is on the protection of investors in publicly traded companies in the USA. EFRAG's proposals are based on the principle of double materiality. means that EFRAG's proposed standards focus both on how sustainability matters impact reporting companies and also on how reporting companies impact the environment and society. Finally, ISSB as a standard setter is the body that crafts sustainability standards that individual jurisdictions and regulators can adopt or otherwise use in their rulemaking. It should be noted that SEC, EFRAG, and the ISSB each occupy very different spaces in the global regulatory landscape.

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