Still no breakthrough in aligning reporting standards / ISSB seeks feedback on sustainability disclosure standards
Corporates are longing for an alignment of meaningful global sustainability disclosure standards. The recent pushback from major companies regarding the EU-Taxonomy bring the challenges to the point: divergent interpretations, non-comparability and questionable relevance for investors are recurring criticisms.
The International Standards and Stability Board (ISSB) wants to remedy this situation and develop investor-relevant, internationally acknowledged sustainability disclosure standards.
The good news: with the draft IFRS S1 & S2 potentially coming into effect from January 24 onwards, the TCFD mechanic is expanded to all ESG topics. This will make it easier to compare the information provided and less easy to hide ugly truths by occasionally leaving out inconvenient topics such as missing risk assessments, lose commitments or ineffective ESG governance.
For companies in Europe, these drafts are very much aligned with the risk and opportunities perspective of the CSRD/ESRS. In combination with more impact-oriented approaches as provided by GRI, they cover the double materiality of sustainability.
The ISSB now seeks feedback on the proposed methodology to update and integrate the SASB standards into the IFRS Sustainability Disclosures. They build on a kind of “anticipated” materiality by predefining relevant topics per sector. This increases comparability and ensures that predominant sector issues are covered.
However: this generic materiality falls short in providing investors the information about what is crucial for the specific business model and operating context of an individual company. Therefore, it can only be an additional aspect and will not free the companies of finding out, which ESG topics really matter to them and what it needs to build and maintain a resilient business in the face of global ESG and supply chain challenges.
Our LRQA/ELEVATE experts are happy to support you further with understanding and complying with these standards and with understanding and proactively managing your ESG related risks and opportunities.Contact us to find out more about how we can support you.
These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.