The Universities Superannuation Scheme (USS), Scottish Widows and the UK’s Local Authority Pension Fund Forum are among those urging the International Sustainability Standards Board (ISSB) to design reporting rules for human and labour rights.
Today, 21 investors, running a combined $1trn in assets, wrote to the IFRS Foundation, which oversees the work of the ISSB. The letter calls on the body to “embark on human rights and human capital concurrently, and as a priority” as it expands the ISSBs’ standards over the next two years.
Earlier this summer, the first two sets of ISSB standards were released, marking a major milestone in global ESG reporting. The first standard set out expectations for how companies should communicate general sustainability risks, while the second addressed the specifics of disclosing on climate change. They are likely to form the basis of regulation around the world.
The IFRS Foundation has been consulting on what its priorities should be for the next phase of its work.
“It is imperative the ISSB prioritises human capital and human rights in its upcoming workplan,” said the investor coalition, in response to the consultation. “The financial materiality of human capital and human rights-related topics – and the critical role of human rights due diligence in identifying business risks – has never been clearer.”
The coalition, which also includes La Française Group, Impax Asset Management, Sycomore Asset Management and Ethos Foundation, pointed to the wave of post-pandemic resignations and lay-offs as examples of the financial implications of working conditions on company valuations.
The European Union plans for a stronger law around human rights due diligence throughout the value chains of companies, and potentially financial institutions too, will also bolster demand for global information on labour and human rights.
Vincent Kaufmann, chief executive officer of signatory Ethos Foundation, said: “As the financial materiality of these issues becomes increasingly clear, it is crucial investors have access to comprehensive and comparable social data from businesses to help inform investment decisions. It is imperative the ISSB prioritises developing human capital and human rights standards as soon as possible to help deliver this.”
While the IFRS Foundation has been exploring labour and human rights as two discrete topics, the investors insist that the two should be addressed together.
The letter was coordinated by UK-based campaign group ShareAction, which runs an investor-backed platform dedicated to labour-related data. The Workforce Disclosure Initiative will launch an investor working group focused on “global social data reporting” later this year, ShareAction said in a statement.
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