Staff at the International Sustainability Standards Board (ISSB) have made public their approach to pushing forward research projects on the risks and opportunities associated with biodiversity, ecosystems, ecosystem services (BEES), as well as human capital.
The research will help to inform the ISSB’s decision on the necessity and feasibility of establishing standards in these areas in the future.
Summing up the overall thrust of the staff’s focus, IASB vice chair Sue Lloyd said “it comes back to what’s reasonably expected to affect an entity’s prospects and material information”.
During a 24 July board meeting, staff said that the research would address the need for decision-useful information for investors, build upon existing frameworks, and align with the global baseline established by International Financial Reporting Standard S1, for general sustainability-related disclosures.
The first phase of the research will focus on gathering evidence of investor interest, financial implications, existing standards and frameworks, and current disclosure practices by companies.
The second phase involves a more in-depth analysis to extract relevant insights and implications from the initial research.
Board members were broadly supportive of the proposals put forward by the staff..
The ISSB confirmed it would pursue research on both BEES and human capital following the conclusion of its first two-year agenda consultation in June.
The board also committed to supporting the implementation of its first two sustainability standards and to updating the legacy Sustainability Accounting Standards Board standards for which it is now responsible.
AI use, water
And in what might amount to a first for a standard setter, the board’s staff said they plan to harness AI to assist with the process of sifting information.
Staff said the use of AI was “more to help make our work easier in terms of looking across financial and other reporting to see what companies have said about, you know, their own, the financial implications for themselves of any of these issues.
“For example, around water management, we might expect to see some sort of more discussion there in those reports. So it is to help us synthesise that information.”
On the issue of water resources, ISSB Emmanuel Faber said water was a crucial link between climate, biodiversity, and business models.
He proposed focusing on water-related risks and opportunities as a key factor in assessing companies’ value at risk and systemic economic effects.
Faber said: “So this is to say really that I think the industry-based approach, location-based, through the water lens, I think is a super promising, way of focusing on what we we might be able to deliver in terms of risks and opportunities disclosures for investors.”
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