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We mustn’t miss this crucial moment to create a global Sustainability Standards Board

The same degree of rigour is needed as standards for reporting on a company’s financial performance, argue Tim Mohin and Bob Eccles

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The time has come for mandated reporting of a company’s sustainability performance based on a common set of global standards that have the same degree of rigor as standards for reporting on a company’s financial performance.

There are four reasons for this:

  1. Sustainability concerns have reached a tipping point. Barely a day goes by without new data warning us that we are living on borrowed time. We are consuming more resources than the planet can sustain and not doing enough to stem climate change. At the same time, income, gender, and racial inequality are creating unacceptable human costs and destabilizing our economy and society.
  2. Pressure from activists, increasing public awareness, and the need to bolster corporate reputation and brand.
  3. The financial fortunes of private sector companies are now inextricably linked to these same sustainability issues.
  4. As a consequence of this, companies and investors can play an important role in sustainable development.

It is the last point – financial implications of sustainability issues – that has caught the attention of mainstream investors, lenders, private equity firms, and others in the financial sector. Unfortunately, most corporate sustainability reports fall short of the mark needed for investor decision making.

Typically, these reports are annual summaries of last year’s performance on a wide variety of topics that are self-selected by the company. For financial stakeholders, reporting must be more rigorous, current, and comparable. Achieving this requires a set of global standards, just as we have with financial reporting. Until this happens, investors struggle with uneven disclosure by companies based on a variety of frameworks and standards developed by NGOs who have been addressing problems that regulators have largely ignored. Without common standards, it is difficult for both companies and investors to integrate sustainability issues in their resource allocation decisions.   

Recently there have been some significant moves to create consistent sustainability disclosure standards and mandated reporting requirements. The European Union is currently considering an update to its ‘Non-financial Reporting Directive (NFRD)’ – which will significantly ramp up mandatory sustainability reporting. At the same time, in capital markets like Brazil, China, Denmark, Hong Kong, India, Malaysia, and South Africa regulators are increasingly requiring sustainability reports for listed companies.

While mandatory reporting is gaining momentum, so is the movement towards harmonizing sustainability reporting standards. In September of 2020, five incumbent sustainability standards organizations CDP, (formerly the Climate Disclosure Project), the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI) the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB) announced a shared vision of what is needed for progress towards comprehensive corporate reporting – and the intent to work together to achieve it. This is highly significant because their frameworks, standards, and data platforms guide the majority of sustainability and integrated reporting.

A further step towards harmonization was announced on November 25, 2020: The IIRC and SASB plan to merge to create the Value Reporting Foundation. The press release noted that “The Value Reporting Foundation could eventually integrate other entities focused on enterprise value creation, and the Foundation and CDSB have jointly signalled interest in entering into exploratory discussions in the coming months.”

And now the world’s largest financial standards organization, the IFRS Foundation, has issued a Consultation Paper on Sustainability Reporting outlining how it might enter this field. The paper proposes establishing a “Sustainability Standards Board (SSB)” which would operate in parallel with the International Accounting Standards Board (IASB). The SSB will initially focus on climate-related issues in order to establish these crucial standards as quickly as possible.

With backing from the investment community, business, and recognition from regulators around the world, the IFRS Foundation is the most practical choice for development of globally accepted sustainability disclosure standards. Because it has strong standard setting capabilities to meet the information needs of investors, the IFRS Foundation is uniquely positioned to incorporate sustainability issues into business and investment decisions. This is essential to ensuring long-term enterprise value creation. After over 20 years of the current sustainability disclosure system, comprised of the Standards issued by a number of NGOs, it’s clear that change is needed.  

While this is a monumental and exciting development, there are three key challenges that must be addressed:

  1.  The IFRS has little capability on sustainability issues and it will take time and resources to create a robust Sustainability Standards Board. Cooperation with the efforts of the NGOs mentioned above will help accelerate the process. As the plurality of stakeholders move to support the IFRS initiative, funding for the SSB can be raised from the investment and business communities, the audit profession, and governments.
  2. The IFRS mandate is to focus on disclosures that are financially material to investors. This will leave many important sustainability issues unaddressed by its standards. It’s essential for the SSB to coordinate with the incumbent NGOs focused on the sustainability disclosure standards that are not now, but may become, financially material. This is the distinctive competence of GRI which should partner to support the IFRS.  
  3. It’s not clear if policy makers will accept and mandate the use of IFRS sustainability standards as they have with their financial disclosure standards. We encourage governments to voice their support for the SSB during the consultation period. The most immediate opportunity to do so is from the EU NFRD. Were the EU to recommend a set of “European Sustainability Standards” the opportunity for a global solution will have been lost - perhaps for good.

We are at a moment in time which many have been hoping for: the opportunity to establish globally consistent standards for sustainability reporting in a mandatory disclosure regime. We call on all stakeholders to collaborate and seize this opportunity. The stakes are high, but if we get this right, we can (finally) align the global financial markets towards creating a more sustainable future for all.  


Timothy Mohin is the former Chief Executive of the Global Reporting Initiative and a corporate sustainability veteran at Intel, Apple and AMD.  He also developed environmental policy in the US Environmental Protection Agency and the US Senate  



Robert Eccles is a Visiting Professor of Management Practice at the Said Business School, Oxford University. He was the Founding Chairman of SASB and one of the founders of the International Integrated Reporting Council


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