The International Sustainability Standards Board (ISSB) faces a major challenge in the coming months as it struggles to balance the competing priorities of its constituents when setting its workplan for the next two years.
While stakeholders called for support to implement the board’s first two sustainability standards, focusing on general sustainability reporting requirements and climate change, they were less clear on what the board should tackle next.
Project manager Greg Bartholemew said: “The only one of the activities that there was relatively clear consensus on […] was supporting implementation. The rest were kind of mixed views.”
Staff also signalled that they plan to bring back a separate analysis of investor feedback to a subsequent meeting.
ISSB vice chair Sue Lloyd told the 16 November meeting that the ISSB should not get too caught up in “the numbers game” when it comes to stakeholder feedback and that it must dig deeper into the feedback and understand the motivations behind it.
She added that it was important for the board to “show leadership” and make decisions based on its own strategy and understanding of what is decision-useful information for investors.
The ISSB published its request for information discussion document in May of this year on a 120-day comment period.
The paper asked for feedback on four potential sustainability-related research projects:
- biodiversity, ecosystems, and ecosystem services (BEES);
- human capital;
- human rights; and
- integration of sustainability-related financial information with other financial information.
The board identified seven criteria for assessing the relative merits of each candidate project. These included the pervasiveness of an issue, its importance to investors, and whether the board and its stakeholders have the resources to make timely progress.
The board also said it would engage in so-called foundational work that would involve:
- supporting the implementation of IFRS Sustainability Disclosure Standards;
- researching targeted enhancements to those standards; and
- enhancing the Sustainability Accounting Standards Board (SASB) Standards.
Additionally, the board’s second vice chair, former World Bank vice president Jingdong Hua, said that while he agreed it was important to “pay special attention to the needs of investors”, it was also important to consider the needs of regulators.
This was, he explained, “because ultimately, for mandatory adoption of the future thematic standards” the views of regulators were also “very important.”
Competing priorities were identified between supporting implementation, starting new projects, addressing interoperability with other reporting frameworks, and deciding what to do with the SASB standards.
And in a further twist, former SASB chair Jeff Hales said the board should not only consider what respondents are suggesting but also understand what “the motivation is for their responses.”
The ISSB received over 400 responses to its request for information on its future agenda priorities.