Some of the world’s largest capital stewards and pension investors have broadly backed the International Sustainability Standards Board’s (ISSB) move to update and improve the international usefulness of the Sustainability Accounting Standards Board (SASB) Standards.  

However, the board has also received clear warnings that failing to align with Europe’s mandatory reporting regime risks piling extra costs onto investors already navigating a fragmented sustainability-reporting landscape.

Norges Bank Investment Management (NBIM), which manages Norway’s sovereign wealth fund, told IPE it “broadly supports the proposed amendments, including the focus on international applicability”, while emphasising the importance of preserving the standards’ “compactness and investor relevance throughout”.

The firm advocated a “building-blocks approach” to interoperability, in which the ISSB serves as the global baseline and jurisdictions add requirements as needed. This would “streamline overlapping areas to facilitate consistent data collection without diluting investor-relevant information,” NBIM said.

The move comes as the ISSB updates the sector-specific SASB Standards to support consistent, decision-useful sustainability disclosures aligned with IFRS S1 and IFRS S2.

It also underscores emerging concerns for European pension funds in relation to the interplay between voluntary global metrics under ISSB and mandatory European Sustainability Reporting Standards (ESRS) developed by the European Financial Reporting Advisory Group (EFRAG) under the Corporate Sustainability Reporting Directive (CSRD). 

EFRAG friction: voluntary vs mandatory

EFRAG has warned that many SASB metrics overlap with those already mandated under ESRS. In its December 2025 comment letter, the group recommended that the ISSB clarify SASB topics as “an illustrative and non-exhaustive list of risks and opportunities”, and that SASB metrics should “serve as examples of possible sector/entity-specific disclosures in ISSB-based reporting”.

The advice highlights a real concern that European companies already subject to mandatory ESRS reporting could face confusion or duplication if SASB metrics are treated as prescriptive rather than illustrative.

EFRAG also urged the ISSB to postpone adding new metrics on biodiversity and human capital, arguing that “every datapoint in SASB standards should be decision-useful for the relevant industry and subject to materiality assessment”.  

The warning was also echoed by industry body PensionsEurope.  

“Coherence, rather than duplication, should be the priority,” Andreea Lungu, sustainable finance lead at PensionsEurope, told IPE.

“Coherence, rather than duplication, should be the priority”

Andreea Lungu at PensionsEurope

She added: “The internationalisation of the SASB Standards can be positive if it strengthens global comparability and reduces fragmentation. However, any divergence from ESRS could create additional complexity for our members”.

Materiality divide persists

Lungu noted that EU pension funds rely on both financial materiality – as reflected in IFRS S1/S2 and SASB – and the broader double-materiality framework embedded in ESRS. The distinction matters: ESRS requires companies to report on impacts as well as financial risks, while SASB focuses solely on financially material issues.

“The globalisation of SASB metrics should therefore not dilute sector-specific detail or reduce the visibility of material risks, particularly in sectors exposed to climate transition or significant physical risks,” she told IPE.

She added that with CSRD and ESRS implementation already underway, “it is important that any additional reporting obligations are carefully assessed to avoid disproportionate increases in workload and to ensure a pragmatic and feasible approach for pension funds”.

Funds urge caution on manager requirements

PensionsEurope also pressed for revisions to asset manager obligations to take account of the final ISSB framework, EU rules, and the strain on members’ reporting capacity. 

“Institutional investors and asset owners are already incorporating ISSB references in their reporting and disclosure practices,” Lungu told IPE.

“In our view, any updates to the Minimum Requirements for external asset managers should be designed with careful consideration of the final ISSB amendments, alignment with EU rules, and the practical reporting burden on members.“

Sector-specific data critical for portfolio decisions

In a comment letter to the ISSB, the California State Teachers’ Retirement System (CalSTRS), which manages $385.8bn, stressed that reliable sector-specific metrics are essential for identifying financial risks across its portfolio.

The fund said sustainability-related issues present “real financial risks” to its investments and backed the amendments strongly. 

Neuberger Berman, in its response, said that “SASB needs to refresh standards to keep disclosures decision-useful, comparable, and assurance-ready”.

The asset manager emphasised the need for “a focused set of high-signal metrics with clear thresholds” that “yields better investor relevance”, and called for standards that “concentrate on high-signal topics that truly move cash flows, timelines, and cost of capital”.

Dutch corporate governance forum Eumedion said it welcomed the ISSB’s proposals and that the “sector-specific SASB standards should serve as the global basis for sector-specific sustainability reporting”.

Additionally, Eumedion also backed the board’s bid to improve interoperability with the Global Reporting Initiative and the Taskforce on Nature-related Financial Disclosures and encouraged the ISSB to continue to work with EFRAG to deliver interoperability. 

The ISSB signalled at its last meeting in February that it plans to issue a further round of updates to the SASB standards for public comment.

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