Trends

New ESG standards lead to new opportunities

The company has been publishing sustainability reports since 2005, based on various international standards and recommendations. As regulations improve and new ones emerge, reports evolve too. Inessa Chernova, Head of Reporting at Nornickel’s Sustainable Development Department, explained what impact IFRS ESG will have on the company’s reporting.
When will Nornickel release its first ESG report under IFRS?

The International Sustainability Standards Board expects the new standards to be first implemented in 2024 reporting. But they can be implemented earlier. Given the obvious difficulties associated with the first full implementation of S1, the standard includes transitional provisions.
What is IFRS ESG?

On June 26, the International Sustainability Standards Board (ISSB) released the first ESG reporting standards under IFRS — S1 and S2. They are based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

IFRS S1 “General Requirements for Disclosure of Sustainability-Related Financial Information” sets out general requirements for sustainability reporting.

IFRS S2 “Climate-Related Disclosures” articulates requirements for disclosure of information about one aspect of sustainable development — climate issues.
New IFRS standards are expected to be released, which will articulate disclosure requirements for other aspects of sustainable development. The release date is to be determined.

The implementation of IFRS ESG will allow for a more systematic presentation of information related to sustainable development, that is of interest to shareholders and investors.

Does this reporting pose any difficulties?

The main challenge is to develop and master new financial assessment methods in order to determine how sustainability risks and opportunities will affect Nornickel.

New experience

How will Nornickel adjust its reporting process to embrace the new standards?

We are looking into how the changes may affect our non-financial reporting process. Nornickel’s Sustainable Development Department plans to implement S2 in the 2023 Sustainability Report.

Over the past few years, we have gained experience in implementing the TCFD recommendations and SASB standards, on which S1 and S2 are based, so the task is doable and should not result in a significant increase in manhours involved in developing ESG reports.

We are currently analyzing the additional scope that needs to be disclosed to comply with S1 and S2. We will include relevant queries in ESG data collection forms.

There are also other ESG disclosure standards, such as GRI. How do the formats differ?

IFRS focus on disclosing financial implications — how sustainability risks and opportunities will affect the company. The main recipients of such reporting are capital providers and investors.

The main goal of the GRI standards is to reveal the impact of businesses on sustainable development.

Nornickel has extensive experience in disclosing information under various standards: GRI, SASB, TCFD, GCI/UNCTAD in a single sustainability report. The company plans to include S2 climate-related disclosures in its 2023 sustainability report.

Who consumes ESG disclosures?

While many large Russian companies no longer publish their ESG reports, Nornickel continues to do so. Why is it important for the company to remain transparent?

Traditionally, sustainability reporting is our key stakeholder communication tool. We want to be as open as possible and provide a full overview of year-by-year sustainability results and events, so that investors, experts and rating agencies could use the information to evaluate the company and make decisions.

We are striving not only to maintain our commitment to openness but also to deepen it. We have released two additional ESG reports for 2022: on human rights and responsible supply chain. A separate climate report is coming soon.

How long has the company been reporting on its ESG projects?

We have been publishing reports since 2005. In 2023, we released the 19th sustainability report, which underwent peer and public review and conforms to the Russian and international recommendations and standards. The next report will be an anniversary one.
September, 2023
2023-09-06 23:00 Governance World Report