ISSB is delivering a win-win for the investor-company dialogue through new
streamlined sustainability disclosures. BY ELIZABETH SEEGER
I
heard of the chief financial officer (CFO) of a mid-cap real estate company who was a relative latecomer to corporate sustainability. Then, a few years ago, he appointed himself chief sustainability officer in addition to his existing role as CFO. He described two shifts that were motivating him. During the past decade there was a shift in sustainability reporting from nar- rative to numbers, and hard data had become a competitive edge in gaining access to capital and customers.
ity Standards Board (ISSB) in 2021 to address this fragmented landscape of voluntary, sustainability-related standards and frameworks, because fragmentation adds cost, complexity, and risk to companies and investors. Just as its sister board at the Foundation, the International
Accounting Standards Board (IASB), transformed the global landscape of financial information through accounting stan- dards, the ISSB was established to create a global baseline of
Sustainability Disclosures The second was that he wanted to get ahead of the impend-
ing shift from voluntary to mandatory reporting around climate risk, human capital, and other sustainability factors. Catching up with the first shift and getting ahead of the second were going to be key to preserving and growing shareholder value. Investor-grade sustainability-related financial disclosures
are critical to well-functioning markets. “Board-ready” may be another term for that caliber of information, used to inform investment decisions as well as decisions about executive com- pensation, mergers and acquisitions, and capital allocation, not to mention setting strategy and managing risk. The demand for such information is found all along the value chain, making it a new currency of business. Yet, despite the efforts of companies to navigate an “alphabet
soup” of reporting standards and frameworks, investors haven’t been getting what they need. The CEO of a major financial data platform confided that although 450 of the S&P 500 companies issue sustainability reports, comparing this information involves sifting through hundreds of formats and thousands of metrics. The IFRS Foundation created the International Sustainabil-
high-quality sustainability disclosures for investors through standards that can be applied no matter what prevailing financial accounting system exists in a jurisdiction. Importantly, the ISSB is not reinventing the wheel. Instead, it is building on the work of market-led investor-focused reporting initiatives, reducing fragmentation, and aligning international support for the global baseline. Among other things: • In 2022, the IFRS Foundation consolidated the Value Reporting Foundation, which housed the SASB Standards and the Integrated Reporting Framework. Through this, the ISSB assumed stewardship for the maintenance and enhancement of the SASB Standards.
• In June 2023, the ISSB issued IFRS S1 and IFRS S2, which fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In July 2023, the Financial Stability Board said that the ISSB Standards mark “the culmination of the work of the TCFD.” Companies that are already reporting in alignment with the SASB Standards and the TCFD recommendations are extremely well-prepared to disclose with the ISSB Standards.
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