Ahead of the International Sustainability Standards Board (ISSB) consultation on proposed global standards for sustainability disclosures closing tomorrow (29 July), a group of institutional investors representing over £620bn (€727bn) of assets under management, including HSBC, Aviva, TFL, Tesco and BT, has written to the ISSB warning that its proposed global sustainability disclosure standards will fail to meet their needs.
The group – A4S Asset Owners Network – is calling for ISSB to strengthen inclusion of factors beyond those narrowly impacting enterprise value, the group announced today.
In a statement the group specifically commented on the ISSB’s current drafts stating that ‘users’ use sustainability-related data to assess enterprise value and “make decisions on whether to provide resources to the entity” (Basics for Conclusions on IFRS SI - BC33; IG1- IG4 of the Illustrative Guidance on S1).
“The investors feel that relying wholly on enterprise value does not give the full picture and does not address users’ needs, as understanding the impact the entity’s activities has on wider society, is just as important as understanding the risks and opportunities affecting the entity’s enterprise value,” it said.
The point at which an entity concludes that an issue has reached enterprise value materiality levels is far later than the point at which investors need to understand the potential impact of an emerging issue, it added.
The response has been submitted to ISSB alongside a letter from more than 80 chief financial officers who have united in calling for global alignment on sustainability reporting and for the ISSB to look further at six key areas within the draft standards.
Russell Picot, chair of the HSBC Bank (UK) Pension Trust and co-chair of A4S Asset Owners Network, said: “As the International Sustainability Standards Board (ISSB) develops global standards on sustainability-related financial disclosures, we – as investors – have a significant and unique opportunity to signal to the global market what data needs we really have for investment decisions.
“Understanding the impact the entity’s activities has on wider society is just as important as understanding the risks and opportunities affecting the entity’s enterprise value. As users of sustainability data, we must collectively ask the ISSB to enhance the proposed global standards and deliver a watershed moment on decision-useful sustainability data.”