A consultation has kicked off on a new reporting framework for social issues, backed by AXA, ING and Generation Investment Management.
The Taskforce on Inequality and Social-related Financial Disclosures (TISFD) is sponsored by departments of Swiss and German government, and its founding members include Californian pension giant CalPERS, Manulife and the Principles for Responsible Investment.
Launched in 2024, a first draft of its framework was opened for feedback today, and seeks to help companies and investors understand the risks, opportunities and impacts their businesses have in relation to people.
This includes topics like pay, labour conditions and freedom of association.
“Diversified asset owners are the most exposed to the risks that come from inequality, and the finance industry has a particular role to play in driving and reducing that inequality,” said TISFD’s executive director, Simon Rawson, the former deputy chief executive of campaign group ShareAction.
“So they can use this framework both to assess portfolio companies, and to disclose themselves.”
He told IPE that the body is planning to create specific recommendations for the finance industry, to help them prepare reports.
In the meantime, the draft framework outlines a way of disclosing social issues that reflects the Taskforce on Nature-related Financial Disclosures and the Taskforce on Climate-related Financial Disclosures.
TISFD said the approach was also compatible with the International Sustainability Standards Board, Global Reporting Initiative and European Sustainability Reporting Standards.
It hopes the framework will eventually form the basis for global standards and regulation for reporting on social issues.
A report published earlier this month by the European Securities and Markets Authority revealed that companies’ ‘own workforce’ drove the third highest-level of enforcement action last year under the Corporate Sustainability Reporting Directive.
Academic research published around the same time showed a spike in the number of companies identifying their own employees as a potential source of negative sustainability impacts.
As well as being endorsed by financial institutions, TISFD has backing from a raft of NGOs, trade unions and non-financial companies. Investors are being asked to help shape the next iteration of its framework, which will be released later this year after the current round of feedback has been received.
A final version, along with early adopters, is due to be issued in 2027.
