Call For Views: International Sustainability Standards Board Releases

The formation of International Sustainability Standards Board (ISSB) in 2021, under the umbrella of the IFRS Foundation, was generally welcomed by many regulators, accountants, companies and investors as a positive step forward in the global harmonisation of sustainability reporting standards and the development of a long-desired ‘global baseline’. Following its 2022 consultations on reporting standards for both general and climate-related disclosures the ISSB published its first two Standards in June 2023, building from the pre-existing frameworks of both the TCFD (Task Force for Climate Related Disclosures) and the SASB (Sustainability Accounting Standards Board).[1] 
 
The release of these standards has been greeted by bodies such as the Financial Conduct Authority in the UK, the GRI and the global investor association, the International Corporate Governance Network;  and  it is anticipated that the International Organisation of Securities Commissions (IOSCO) will endorse these new ISSB reporting standards. Regulators in Singapore (Sustainability Reporting Advisory Committee) have also made reporting recommendations that align with ISSB standards.

At the same time the ISSB is also conducting a consultation, which closes in September 2023, focusing on its agenda priorities in the future, including  possible new projects relating to biodiversity, human capital and human rights, along with other possible enhancements to the new standards.[2]
 
Amidst this broadly supportive basis of support and momentum questions remain in some circles. Questions remain with regard to the extent to which there will remain competing global standards, most notably between the European Sustainability Reporting Standards (ESRS) and the ISSB, particularly with regard to differing approaches to materiality. The ISSB focuses on ‘single’ or financial materiality of how sustainability factors may affect a company’s financial performance, whereas the EFRS is focused on the ‘double materiality’ of how a company’s performance also affects its stakeholders and society more broadly.
 
Do these fundamental differences suggest that the ISSB and EFRS standards will result in ongoing fragmentation in standards, or will the much discussed ‘interoperability’ between IFRS and EFRS standards allow for the global convergence reporters and report users are looking for? Has the ISSB gone far enough? Dr. Nathan de Arriba-Sellier, Research Director of the Yale Initiative on Sustainable Finance, has already weighed in suggesting the ISSB has missed an opportunity. As we digest these developments and look forward we welcome further views, both from our academic and professional members, on this topic so that we can follow this important global policy development.
 
We would like to hear from you. Please submit any short views on these ISSB initiatives (800-900 words), sustainability reporting or share other relevant information and comments with us to: blog@ecgi.org 

George Dallas
Head of Content, ECGI

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[1] IFRS S1: General Requirements for the Disclosure of Sustainability-related Financial Information, June 2023:  https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards-issb/english/2023/issued/part-a/issb-2023-a-ifrs-s1-general-requirements-for-disclosure-of-sustainability-related-financial-information.pdf
 
 IFRS S2: Climate-related Disclosures, June 2023:  https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards-issb/english/2023/issued/part-a/issb-2023-a-ifrs-s2-climate-related-disclosures.pdf

[2] ISSB Consultation on Agenda Priorities, May 2023: https://www.ifrs.org/content/dam/ifrs/project/issb-consultation-on-agenda-priorities/survey-overview.pdf

IN TOUCH:

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