Global support for sustainability reporting
There is strong global support for the Foundation to take a key role in sustainability reporting from securities regulators and broader governments alike. In February 2021, the International Organization of Securities Commissions (IOSCO) Board announced its three priority areas for improvement in sustainability-related disclosures by companies and asset managers: encouraging globally consistent standards; promoting comparable metrics and narratives; and coordinating these actions across approaches. To achieve these priorities, IOSCO worked with the Foundation’s trustees as they developed a plan for the establishment of the ISSB. IOSCO is an observer in the TRWG.
In a June 2021 communiqué, the G7 Finance Ministers and Central Bank Governors expressed their agreement on the need for a baseline global reporting standard for sustainability, which jurisdictions could further supplement. They welcomed the Foundation’s program of work to develop this baseline standard.
Similar messages of support were expressed in the communiqué published by the G20 Finance Ministers and Central Bank Governors in July 2021 and the G20 Rome Leaders’ Declaration released in October 2021. Having such strong support from governments globally makes it at least possible, if not likely, that the ISSB standards could become the foundational, or required, building block for sustainability reporting in many jurisdictions.
National and regional efforts on sustainability reporting
In addition to global support, there are also national and regional initiatives on sustainability. Specifically, in April 2021, the European Commission adopted a legislative proposal for a Corporate Sustainability Reporting Directive that would require companies within its scope to report in compliance with European sustainability reporting standards adopted by the European Commission for financial years beginning on or after 1 January 2023. The European sustainability standards are currently being prepared by a project task force under the European Financial Reporting Advisory Group and the first standards are planned for release in October 2022.
The European standards aim to be compatible with ISSB standards, while requiring high-quality sustainability information to foster better comparability. The proposal would also require assurance of sustainability information.
It is important that the ISSB works closely together with national and regional initiatives on sustainability reporting work so that the standards emerging from each of these bodies are harmonized on the fundamental concepts and foundational technical elements to ensure the building blocks approach will succeed. This collaboration should be carried out not only at the strategic level, but also at the technical level.