International Sustainability Standards Board
The International Sustainability Standards Board (ISSB) is a pivotal entity in the landscape of global sustainability reporting. Established under the auspices of the IFRS Foundation, the ISSB was announced on November 3, 2021, during the COP26 summit in Glasgow. It emerged in response to the pressing demand for a unified set of sustainability disclosure standards that cater to the informational needs of investors and financial markets.
Mandate and Objectives
The ISSB's mandate revolves around the development of a comprehensive global baseline of sustainability disclosures. Its objectives are multifaceted:
- To develop standards for a global baseline of sustainability disclosures.
- To meet the information needs of investors.
- To enable companies to provide comprehensive sustainability information to global capital markets.
- To facilitate interoperability with disclosures that are jurisdiction-specific and/or aimed at broader stakeholder groups.
Global Support and Development
The ISSB enjoys robust international backing, with endorsements from influential groups such as the G7, G20, the International Organization of Securities Commissions (IOSCO), and the Financial Stability Board. This support extends to finance ministers and central bank governors from over 40 jurisdictions, highlighting the board's significance in shaping the future of sustainability reporting.
Integration and Efficiency
In its quest to streamline sustainability reporting, the ISSB builds upon the foundational work of market-led investor-focused reporting initiatives. These include the Climate Disclosure Standards Board (CDSB), the Task Force for Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework, and industry-based SASB Standards, as well as the World Economic Forum’s Stakeholder Capitalism Metrics.
The ISSB's standards are crafted to be decision-useful, cost-effective, and informed by market realities. They aim to provide the necessary information in an efficient manner, thereby supporting investor decision-making and promoting international comparability to attract capital. A key advantage of the ISSB's standards is their design to prevent double-reporting, allowing companies to adhere to jurisdictional requirements while benefiting from the efficiency and comparability of the global baseline.
Leadership and Expansion
The ISSB's leadership includes Emmanuel Faber as its inaugural chair, with a team that spans across multiple global financial hubs. The board's presence is not only limited to its headquarters but also extends to offices in strategic locations such as Frankfurt, Montreal, and Beijing, reflecting its commitment to a truly international approach to sustainability standards.
Future Prospects
As the ISSB continues to evolve, it remains focused on delivering standards that resonate with the dynamic needs of the global market. Its standards, known as IFRS-S ("S" for sustainability), will form part of the broader body of International Financial Reporting Standards (IFRS), distinguishing them from the accounting standards issued by the ISSB's sister body, the International Accounting Standards Board.
In summary, the ISSB stands as a beacon of progress in the realm of sustainability reporting, driving forward the integration of environmental, social, and governance (ESG) factors into the core of financial analysis and decision-making. Its ongoing efforts to harmonize sustainability disclosures underscore its pivotal role in fostering a sustainable future for the global economy.