The chair of the International Sustainability Standards Board has warned the board risks opening a “Pandora’s Box” with its commitment to update the legacy Sustainability Accounting Standards Board’s (SASB) standards.
Emmanuel Faber said: “We actually opened a Pandora’s Box […] by saying that we are now going to prioritise our work on enhancing the [SASB] standards.”
The ISSB chair continued that it was one thing to present a set of standards as “fit for purpose” and “finalised,” and another to say that “in the next 2 to 3 years, whatever, all of these standards are going to be reviewed and enhanced.”
Faber’s comments came during a 12 June meeting where ISSB members shared their comments on a staff approach for updating the SASB standards.
The SASB standards represent an important source of guidance for companies applying IFRS S-1, General Requirements for Disclosure of Sustainability-related Financial Information.
They complement the standard by helping companies to identify sustainability-related risks, opportunities, and disclosures beyond climate considerations.
The IFRS Foundation took over responsibility for maintaining the SASB standards through a merger with the Value Reporting Foundation in July 2021.
Last year, the ISSB updated the SASB standards to enhance their relevance for an international audience. The ISSB is now working on its work plan for the next two years, having held a public consultation last year.
Following that consultation, the ISSB approved a staff proposal for its work plan, focusing heavily on supporting companies to implement its recently launched sustainability disclosure standards.
The staff have proposed the same criteria to assess changes to the SASB standards as they used to assess the relative priority of standard-setting projects during the agenda consultation.
These criteria include the importance of a matter to investors, the types of companies affected, the issue’s interaction with other projects, and the complexity of the issue.
Further complicating the landscape is the ISSB’s commitment to cooperate with other standard setters to ensure their standards are ‘interoperable’.
Faber noted that the European Sustainability Reporting Standards already reference SASB standards, further that European companies want sectoral standards based on SASB standards.
He also noted that the ISSB’s “ambitious, but fundamental agreement” with the Global Reporting Initiative (GRI) to achieve “direct interoperability” with their standards was akin to opening a “Pandora’s Box”, but that it would ultimately simplify reporting and enhance information quality.
Last month, the IFRS Foundation and the GRI agreed to work together to deliver “full interoperability” between their respective reporting frameworks.
The scale of the task facing the board emerged on 11 June when staff presented the results of a mapping exercise covering ISSB, European Union, and GRI standards to the ISSB’s Sustainability Standards Advisory Forum.
The meeting also heard that the board also faces the challenge of meeting the needs of a diverse range of stakeholders, including the global south, as well as the clear overlaps and potential with its own proposed research projects.
The board’s vice chair, Sue Lloyd, noted that the staff would continue to develop their proposals for the board to vote on at a future meeting.
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