The Principles for Responsible Investment and the Value Reporting Foundation are among the architects of a new Impact Management Platform, which will sit alongside the IFRS’s upcoming risk-based disclosure standards.
The PRI and VRF have collaborated with the Global Reporting Initiative (GRI), OECD and World Benchmarking Alliance on the initiative, which they say will “mainstream the practice of impact management”. It will serve as a “complementary forum” to the International Sustainability Standards Board (ISSB), which is developing much anticipated global standards for corporate sustainability disclosures.
Karen Wilson, the OECD lead for the Platform, said to RI: “Before companies and investors can start to disclose against the upcoming ISSB standards, they need to start measuring and managing their impacts, which can be difficult as there are so many existing frameworks – which is where we come in.
“The Platform aims to create clarity on how and when to use existing standards and metrics, we are not trying to reinvent the wheel and develop new impact measurement standards of our own. The Platform will also produce guidance and incorporate any new standards which are produced in the future.”
The Platform offers a free online tool to help users navigate existing frameworks, and outlines the core actions of impact management and contains resources for organisations and investors implement them.
According to an official work agenda, Platform partners will “identify opportunities to consolidate existing sustainability resources, collectively address gaps, and coordinate with policymakers and regulators to support the mainstreaming of impact management”.
The Platform is a continuation of an earlier collaboration among partners, named the Impact Management Project, which concluded in 2021 after five years. The initial phase was billed as a “consensus-building forum” to establish a shared vision for corporate reporting and support the creation of the ISSB.
A total of 18 bodies have partnered on the two initiatives including the CDP, Climate Disclosure Standards Board (CDSB), Global Impact Investing Network, Global Steering Group for Impact Investment, International Finance Corporation, Impact-Weighted Accounts Initiative at Harvard Business School, UN Development Programme, UNEP – Finance Initiative, the UN Global Compact and the World Benchmarking Alliance.
In addition to complementing the work of the ISSB, partners VRF – a consolidation of the International Integrated Reporting Council and the Sustainability Accounting Standards Board – and CDSB are directly involved in developing the ISSB disclosure standards, which will have a core focus on ‘enterprise value’, or the impact of sustainability factors on company valuations.
According to the ISSB, “sustainability matters that do not affect the reporting entity’s enterprise value are outside the scope of general purpose financial reporting”.
Meanwhile, the GRI has been appointed as “co-constructer” of corporate sustainability reporting standards in the EU, which will underpin incoming disclosure requirements. In contrast to the ISSB, the EU is pursuing a ‘double materiality’ approach, which will encompass the impacts of business activities on society and the environment, in addition to ‘enterprise value’.
Eric Hespenheide, GRI Interim CEO, has said that focusing on a “company’s financially material sustainability topics – while important from the context of helping markets to assess opportunities and risks – is not sufficient to deliver full transparency on sustainability impacts, as envisioned by the GRI Standards and embraced by the EU”.
However, regulators such as the UK FCA’s Sheldon Mills and the EU Commissioner Mairead Mcguinness have described the IFRS standards as a ‘ceiling’ or common global baseline for sustainability disclosures, while national standards would capture relevant impact priorities and policy objectives.