In a joint UKSA/ShareSoc response on 29 July 2022, we said
- We support the creation of the International Sustainability Standards Board and wish to see it succeed in its mission of developing high-quality global standards for sustainability reporting by companies, which should lead to mitigate against the confusion of the complex web of sustainability standards that currently exists. In order to succeed as global standards, the IFRS Sustainability Standards need to be adopted by the local authorities of countries and regions around the world. A necessary basis for this adoption will be that the ISSB demonstrates robust due process, similar to the IASB’s for IFRS Accounting Standards.
- The issuance of S1 and S2 by the chair and vice-chair of the ISSB ahead of the appointment of other Board members – and ahead therefore of the ISSB being quorate – has positive aspects, not least by demonstrating a positive declaration of intent to deliver. We welcome this rapidity in activity and support its continuance within the boundaries of sufficient due process.
- However, the process so far means that the proposed standards have not been through the public board debate that would be a necessary expectation of the ISSB demonstrating due process. Given recent appointments, the board will now be quorate for the first time at its July meeting, and we understand that further board members will be added in the coming months. However, these two standards are probably the most important that the board will produce and deserve full debate and discussion by a full board – and we fully expect that the high quality board members would themselves insist upon such full debate. It would be useful to hear what the full board plan on progressing the EDs and the proposed timetable.
- We therefore emphasise that the newly quorate board should focus only on developing S1 and S2. This may require re-deliberation and reissuance of draft standards. Acting precipitately risks damaging the ISSB’s reputation for due process in ways that would hinder the aim that these standards are adopted globally. While S2 has faced some public testing through its prior existence as TCFD standards, S1 has been subject to less testing and given its fundamental nature to the whole of the ISSB’s future work, a clear formal due process by the whole board seems the only appropriate step. Any small delay is a price well worth paying for the greater good of broad support and adoption of these initial proposed standards around the world.
The consultation papers can be read here
- S1 – IFRS – Exposure Draft and comment letters: General Sustainability-related Disclosures
- S2 – IFRS – Exposure Draft and comment letters: Climate-related Disclosures
Our full response can be read here: ISSB IFRS S1 and S2 EDs consultation response from UKSA and ShareSoc FINAL
Glossary of Abbreviations
|IASB||International Accounting Standards Board|
|IFRS||International Financial Reporting Standards|
|ISSB||International Sustainability Standards Board|
|TCFD||Task Force on Climate-Related Financial Disclosures|
by Cliff Weight, Policy Director, ShareSoc