The head of the Principles for Responsible Investment (PRI) has urged politicians and regulators to make International Sustainability Standards Board (ISSB) disclosures mandatory in the next two years.
Responding to the publication of the first two standards by the ISSB today, PRI CEO David Atkin said the investor network supported the London Stock Exchange Group (LSEG) in calling for “all policymakers around the world” to introduce mandatory ISSB disclosures across their economies “by 2025 at the latest”.
ISSB was launched in 2021 by the IFRS Foundation with the aim of creating a global baseline for corporate sustainability standards. In less than two years, the standard setter has finalised its general reporting standards (IFRS S1) and those on climate, following sign-off from its board in February (IFRS S2).
Speaking at a launch event hosted by the LSEG, ISSB chair Emmanuel Faber described the standards as an “accounting-based language”.
“It is not a suite of ESG metrics or disclosures,” he said. “It is a comprehensive language which is deemed to be consistent, verifiable and therefore decision-useful.”
The publication of the standards has been welcomed by asset owners around the world.
Christopher Ailman, CIO at the $310 billion Californian pension fund giant CalSTRS, said: “It is imperative we improve the sustainability-related financial information to help us manage the risks to our portfolio so we can protect the pensions of California’s public educators, and the ISSB standards will help us accomplish this goal.”
Louise Davidson, CEO at the Australian Council of Superannuation Investors (ACSI), echoed Atkin’s call for mandatory disclosure. “Adoption of mandatory reporting in line with the ISSB standards would help fill the data gap with comparable information about the climate change and other sustainability risks in their portfolios – information that is often lacking now.”
Barbara Zvan, president and CEO at the University Pension Plan Ontario, added that the ISSB standards will improve the transparency, consistency and comparability of sustainability disclosures, “in turn delivering financially relevant information by industry to investors around the world”.
The current absence of consistent and high-quality sustainability data has been a “barrier that has impeded the effective flow of capital”, Atkin said. “The ISSB’s S1 and S2 standards can now provide this critical common language on sustainability disclosure which establishes a common baseline for issuers regardless of size, sector or location.”
Regulator support
Sacha Sadan, director of ESG at UK financial regulator the FCA, expressed his delight at the publication of the first two standards.
“We have been working closely with the ISSB since the start and are hugely supportive of its mission to create a common, global language for companies around the world to communicate their sustainability stories in a consistent and comparable way,” he said.
ISSB’s standards are expected to be a core component of the UK’s planned corporate disclosure regime, the Sustainability Disclosure Regime (SDR), the consultation on which closed earlier this year.
The chair of global regulatory body IOSCO, Jean Paul Servais, described the release of the ISSB standards as a “pivotal moment in global corporate reporting”. Speaking at the LSEG event, he added that he had never seen standards developed so fast – a fact he said highlighted the urgency of this information.
IOSCO will now assess the ISSB standards with a view to potentially endorsing them for use by the global securities regulators that form its membership, Servais added.
China’s ministry of finance also commented on the release of the ISSB standards. Vice-minister Zhongming Zhu said the country is “fully committed to supporting the work of the ISSB and the development of global sustainability disclosure standards”.
During the consultation, China’s ministry of finance recommended that the ISSB “re-examine” the positioning of its standards as a “global baseline” given their failure to fully cater for the capabilities of different jurisdictions to meet them.
Last week, the IFRS Foundation announced it had opened a Beijing office for the ISSB, to act as a hub for stakeholder engagement in Asia, facilitating “deeper co-operation and engagement with stakeholders, and undertaking capacity-building activities for emerging economies, developing countries and SMEs”.
If you do not receive this within five minutes, please try to sign in again. If the problem persists, please email: