The Group of Seven (G7) finance ministers and central bank governors have endorsed the decision of the International Financial Reporting Standards Foundation Trustees to establish the International Sustainability Standards Board (ISSB).

In a 20 May communiqué, the finance leaders welcomed “the inauguration of the ISSB and its progress of work on the global baseline of sustainability reporting standards”.

The document urges the ISSB and national and regional standard-setters “as well as other reporting initiatives to actively cooperate in the process of elaborating the baseline with the aim of reaching standards that can be implemented globally”.

Responding to the statement, ISSB chair Emmanuel Faber said: “We are encouraged by the G7’s endorsement of our work to deliver a global baseline of sustainability disclosures for the capital markets.

“We reaffirm our commitment to work in close cooperation with jurisdictions and market participants, both on development and adoption of the global baseline and its interoperability with broader jurisdictional requirements.”

The release of the joint communiqué follows the ISSB’s update on progress to establish a global minimum or baseline in sustainability reporting.

In that update, the Foundation described the four steps it has so far taken to establish that global minimum.

The first is the release for public comment of two draft sustainability standards in March dealing with general sustainability disclosures and climate-change disclosures.

The two drafts build on prototypes published at COP26 in November 2021 and incorporate the Task Force on Climate-related Financial Disclosures (TCFD). Both documents are open for public comment until 29 July 2022.

The second step saw the ISSB set up a working group through which the board can consult “with jurisdictions that are consulting, or plan to consult, on their capital market requirements for sustainability disclosures”.

The board added that it “will pay special attention to the needs of emerging and developing economies, as well as smaller- and medium-sized companies and others within global supply chains”, given the difficulties they might encounter in making sustainability disclosure.

Third, the ISSB said it will “intensify” its engagement with “jurisdictional authorities and market participants to facilitate participation” in its standard-setting activities.

Fourth, the 18 May statement added that the ISSB is in the process of setting up “the necessary advisory and consultative bodies that will serve as a platform for enhanced collaboration with other international organisations, jurisdictional authorities and representatives of other stakeholders”.

The IFRS Foundation has already unveiled agreements to establish the ISSB’s primary locations in Frankfurt and Montreal. Work is now ongoing to establish a hub in Asia, the update read.

In addition, the Foundation has completed a merger with the Climate Disclosure Standards Board, and expects to have absorbed the Value Reporting Foundation – home to the Sustainability Accounting Standards Board and the Integrated Reporting Council – by the end of June this year.

Meanwhile, in a presentation prepared for the Foundation’s Emerging Economies Group, the ISSB revealed it will fix an effective date for the two draft sustainability once it has had an opportunity to review constituent feedback on the issue.

The presentation also confirmed that the ISSB expects to start deliberating constituent feedback from August and to release the final standards in December.

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