Last summer, we wrote an article comparing the various ESG reporting frameworks like CDP, GRI, and more. In it, we briefly discussed the need for a unified standard:
"While there are some significant differences between the various ESG reporting frameworks, clearly there is a lot of overlap. This has created confusion for both the preparers and users of ESG reports.
Many investors and companies have argued that a standardized ESG reporting framework is necessary in order to simplify understanding. Having a single, universal framework would make it easier for companies to identify and report on ESG performance. And, it would make it easier for investors to compare different companies’ sustainability reports."
(You can read the full article here.)
Since we published that article, the International Financial Reporting Standards Foundation (IFRS) has announced its intention to consolidate with the Value Reporting Foundation (VRF) and the Climate Disclosure Standards Board (CDSB) to form the first ever International Sustainability Standards Board (ISSB).
What is the ISSB?
The formation of the ISSB is big news for businesses, investors, and sustainability professionals alike. According to the IFRS, the goal of the ISSB is to “to deliver a comprehensive global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions.”
If all goes according to plan, the ISSB will give companies a unified set of standards for reporting on ESG data. This will allow investors to compare companies based on financial and sustainability performance data.
What’s the timeline for the ISSB standards?
The formation of the ISSB was announced on November 3, 2021, at the COP26 global summit in Glasgow. On January 1, 2022, former Danone CEO Emmanuel Faber was appointed as the first Chair of the newly formed climate disclosure body. Faber, a long-time sustainability champion, has founded and chaired several international organizations and initiatives, including One Planet Business for Biodiversity (OP2B) and the G7 Business for Inclusive Growth coalition.
Sue Lloyd was appointed as the Vice-Chair on March 1, 2022. Lloyd served as a member and Vice-Chair of the International Accounting Standards Board (IASB), as well as Chair of the IFRS Interpretations Committee. Members have not yet been announced. The ISSB Trustees are currently seeking nominations for members.
The ISSB aims to consolidate the CDSB and VRF by June 2022, and have their first set of standards available by the end of 2022. If that seems like a short timeline, keep in mind that the IFRS has already published two sets of prototype standards covering climate and general disclosure requirements. These prototypes will act as a framework for the ISSB to build on as they develop their first set of standards.
How can sustainability professionals prepare?
Most sustainability professionals agree that a unified reporting standard like the ISSB is necessary, and are looking forward to a more coherent and streamlined system. And while the ISSB certainly adds to the discussion on ESG reporting, it won’t be the final word. Standards bodies are constantly coming up with new ESG frameworks, and sustainability reporting a year from now will look very different than it did five years ago, a year ago, or today.
That's not necessarily a bad thing. Each new standard gets us a step closer to making disclosure simple for companies and easy to understand for investors and customers.
What it does mean, though, is that you need to be prepared for change. How? By having systems in place to collect and organize vast amounts of operational data; namely, ESG management software. With ESG management software, you’ll have instant access to the information you need to measure performance and report against various sustainability standards. It's as simple as pulling the right data into a report or dashboard — no need to reinvent the wheel.