Detlef Glow
On June 26, 2023, the International Sustainable Standards Board (ISSB) launched the IFRS Sustainability 1 (general requirements standard) and the IFRS Sustainability 2 (climate standard) to align and foster sustainability-related disclosures at a company level in capital markets around the globe. For those who have expected a further standard to classify companies with regard to their sustainability or to receive some kind of rating, the release of the new standards might have been a disappointment. That said, the ISSB Standards had, like the SFDR regulation, never had the purpose to be used to classify or rate a company.
The ISSB Standards have the purpose to build a global baseline by ensuring that companies provide sustainability-related information alongside financial statements by using the same kind of language. This means the ISSB Standards have been developed to be used in conjunction with accounting requirements to fulfill the demand of a consistent understanding of how sustainability factors are affecting the prospects of a company.
This also means the ISSB Standards may fall short of meeting the requirements of local reporting regulations such as the Corporate Sustainability Reporting Directive (CSRD) in the EU, but the ISSB is working with local regulators to support effective reporting when the ISSB Standards are applied in combination with other reporting standards.
From my point of view, the launch of an aligned reporting framework is much needed to foster the success of ESG-related reporting, as only the usage of a common language and, as a result, the aligned definition and measurement of respective data points will enable investors around the world to evaluate a company from the same point of view. Meanwhile, additional data points either gathered via proprietary research or local regulator demand may help to add additional viewpoints to evaluate a company based on specific criteria. That said, I think a global baseline with regard to disclosure standards is very helpful for companies which have to report ESG-related data in multiple jurisdictions as well as for analyst and investors. This is because they can be assured that at least the aligned data points are evaluated and measured in the same way, regardless of where the respective company is headquartered.
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