​NBIM says CDSB should widen its definition of social data

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The manager of the Norway’s NOK12trn (€1.2trn) Government Pension Fund Global is pushing for a broader definition of social impacts within the Climate Disclosures Standard Board’s (CDSB) framework, saying such issues as anti-competitive practices and opaqueness over tax could be included.

In a response to the CDSB’s consultation on updates to its framework for reporting environmental and social information, Norges Bank Investment Management (NBIM) also welcomed the formation of the International Sustainability Standards Board (ISSB) – which was announced by the International Financial Reporting Foundation last November – under which the CDSB will merge with the Value Reporting Foundation.

In the letter to the CDSB, NBIM chief governance and compliance officer Carine Smith Ihenacho and Severine Neervoort, senior analyst, corporate governance wrote that voluntary sustainability reporting frameworks, such as that developed by the board, had played an important role.

“However, due to the multitude of standards and their voluntary nature, the information disclosed by companies is not always complete, consistent, or comparable across markets,” the pair said, adding that the reporting could also be burdensome for companies.

Commenting on the CDSB proposal to expand the scope of its framework to include social information, the NBIM pair said: “We welcome this decision and hope the future ISSB standards will also cover social matters, as there is a need for global and comprehensive standards for reporting information on social issues.”

Smith Ihenacho and Neervoort said the CDSB’s definition of social impacts focused on the ability of people to realise their human rights, but suggested this be widened to encompass issues that impacted society at large, without necessarily breaching human rights.

As examples of issues that could be included, they cited corrupt and anti-competitive practices, disregard for consumer interests and welfare, and lack of tax transparency.

NBIM also said in the feedback letter, published on its website today, that the CDSB’s guidance was quite complex, and it was unclear as to what constituted guidance or requirements.

“While the information disclosed may be useful for an in-depth understanding of a single company’s sustainability performance, it is unlikely to be comparable across companies and therefore may not allow portfolio analysis,” the firm said.

Finally, Smith Ihenacho and Neervoort said the framework did not currently include a comprehensive list of indicators to help investors assess companies’ performance in managing sustainability risks and opportunities.

Leading on from this, they wrote: “It might be preferable for CDSB to maintain a principle-based approach (rather than pointing at a couple of performance indicators only).”