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How stakeholders can help the ISSB prioritize its work plan

The ISSB needs stakeholder feedback and market information on a range of topics to help shape the future of sustainability-related reporting.

In brief
  • ISSB research shows growing demand for information on biodiversity, ecosystems and ecosystem services, human capital, human rights and integration in reporting.
  • Stakeholder input on the direction and priorities of the ISSB agenda is key to ensuring balance in the scope of its sustainability-related standard-setting.
  • The potential integration of sustainability reporting and financial reporting could change fundamentally how companies report their performance externally.

This May, the International Sustainability Standards Board (ISSB) launched the first public consultation on its agenda priorities for the next two years. The ISSB is gathering the views of stakeholders on key themes, like:

  • The strategic direction and balance of the ISSB’s activities;
  • The criteria for which sustainability-related matters to prioritize and add to the ISSB’s work plan; and
  • A proposed list of new prospective research and standard-setting projects for the ISSB.

Senior executives and board members can make a valuable contribution to the creation of the ISSB`s work plan through the comment letter process which is open until 1 September 2023.

Make your views count

The ISSB initiated the agenda consultation to ensure the transparency of its standard setting process in accordance with its due process. By gathering the information from the agenda consultation, the ISSB will gain a broader understanding of the public's perspective before committing to any major strategic plans. The consultation implies that the stakeholders will be ranking the priority of strategic ISSB activities, including:

  • New research and standard setting projects;
  • Implementation support and further enhancements of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (it has been announced they will be finalized later this June); and
  • Improvements in the Sustainability Accounting Standards Board (SASB) standards (now also under the remit of the IFRS Foundation after the merger with the Value Reporting Foundation).

Moreover, stakeholders have been asked to provide feedback on the criteria to use when prioritizing sustainability-related reporting issues that could be added to its work plan.

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The ISSB has previously performed research and outreach to improve the agenda consultation process and has already identified potential projects on its sustainability-related reporting agenda with the help of respondents. That process shows that companies can make a significant contribution to the ISSB’s work plan by providing meaningful feedback on the agenda consultation. Such feedback will allow the ISSB to better cater for the needs of stakeholders on sustainability reporting

 

Most importantly, high-quality standards developed by the ISSB would be invaluable for users when making crucial investment decisions, which will further drive long-term sustainable development.

 

Sustainability is evolving and will demand more resources and expertise

As explained above, IFRS S2 is a topic-based standard that focuses on climate change, which is probably the most prominent matter in sustainability reporting today. The ISSB has identified future potential projects, namely, biodiversity, ecosystem and ecosystem services, human capital, human rights and integration in reporting. These potential projects under consideration illustrate that there is a wide spectrum of sustainability matters that is set to continue expanding over time, constantly responding to developing investor needs.

 

This creates a continuous circular engagement whereby, as more topic-based standards are being developed with more specific and detailed disclosure requirements, companies will identify more sustainability-related risks and opportunities.

 

Therefore, to support successful implementation of sustainability standards in the long term, companies need to be nimble and prepared to adjust the level of resources and expertise available for various sustainability topics not to fall behind on the rapidly evolving standard setting developments.

Evolution of the sustainability disclosures by integration with financial and other non-financial reporting standards

One of the ways to create a coherent and comprehensive system of corporate reporting that provides a transparent view of how a company creates value over time is to integrate sustainability reporting with financial reporting. This should improve the quality of information available to investors to enable a more efficient and productive allocation of resources. This seems to be a large and complex project that would require additional coordination with the International Accounting Standards Board (IASB); but it could, in the longer term, bring about fundamental changes as to how companies report their performance to external stakeholders.

Another useful approach in the sustainability reporting evolution journey is the so-called interoperability-the capacity to connect and coordinate between other sustainability reporting standards and frameworks (both jurisdictional and voluntary), which has been identified as one of the core elements of the ISSB’s activities, fundamental to achieving the ISSB’s mission to deliver a comprehensive global baseline of sustainability-related disclosures not only to meet the needs of investors, but also to ensure high-quality disclosures by companies. Designed with a building-block approach in mind, IFRS Sustainability Disclosure Standards (which include IFRS S1, IFRS S2, and future standards) would allow jurisdictions to adjust their corporate reporting needs by supplementing these standards with additional disclosure requirements if necessary.

 

The ISSB will continue considering interoperability in future research projects and standard-setting.

 

When IFRS S1 and S2 are finalized in late June, the ISSB also intends to provide additional guidance to support their effective implementation. This means that companies, especially those subject to multiple sustainability reporting obligations in various jurisdictions, will find it beneficial to follow the standard setting developments on interoperability, which will help reduce the reporting burden and the costs and complexity of implementing these standards. 

Conclusion

Standard setting on global sustainability reporting has rapidly developed in 2023 and the inaugural ISSB agenda consultation will set yet another milestone. Companies are encouraged to actively participate in the agenda consultation by providing feedback on the matters raised by the ISSB via its comment letter process.

Summary

The International Sustainability Standards Board (ISSB) has asked stakeholders to provide feedback on its agenda priorities, which will determine the work plan for the next two years and, ultimately, help to shape future sustainability-related reporting that will inform investment decisions. The four projects the ISSB identified that could potentially be prioritized are: biodiversity, ecosystems and ecosystem services; human capital and human rights; and integration in reporting. The comment period for feedback to the ISSB ends on 1 September 2023.

About this article

Photographic portrait of Victor Chan
Victor Chan
International Director, Global IFRS Services, Ernst & Young Global Limited
Develops insights on applying IFRS to emerging accounting issues. Focuses on leases, crypto-assets, investment property and latest standard-setting activities. Enjoys relaxing with family.
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