ISSB progresses discussions on reference to other standards to support increased interoperability

The International Sustainability Standards Board (ISSB) met today, 3 November 2022, to review staff proposals to enhance interoperability with other international and jurisdictional sustainability-related standards.

During the meeting, the ISSB confirmed:

• a requirement to consider SASB Standards. In meeting the requirements for the ISSB’s proposed general sustainability requirements (S1), companies shall consider SASB Standards both when identifying what sustainability matters to report on and in developing appropriate disclosures. This is both because SASB standards provide disclosures across a range of sustainability matters that have been designed with an investor focus and as industry-specific disclosures are fundamental to ISSB’s approach to meeting investors’ information needs. It was also noted that requiring consideration of SASB Standards when applying S1 can improve the comparability of disclosures. Following consolidation with the Value Reporting Foundation, SASB Standards are now materials of the ISSB providing a market-proven, cost-effective, decision-useful industry-based suite of standards.


• CDSB materials serve as a useful reference. In addition, the ISSB decided that content from the former Climate Disclosure Standards Board (whose materials are also now materials of the ISSB) may be considered by companies as a useful framework to identify sustainability risks and opportunities as well as disclosures. This is particularly the case for topics such as biodiversity and water, which market feedback led the ISSB to decide in its October meeting to work on as an extension to S2, in connection to climate risks and opportunities. 
  
  
• discussions about allowing ESRS and GRI Standards to be referenced in the absence of directly applicable ISSB Standards. The ISSB also discussed but did not vote on whether S1 should reference additional standards that are created for a broader stakeholder’s group extending beyond the primary users that are the focus of ISSB standards. S1 establishes the global baseline for reporting by requiring an entity to provide material information for investors about all of its sustainability risks and opportunities in its full value chain. In the absence of directly applicable ISSB standards, the ISSB discussed whether companies applying S1 should be permitted to consider metrics developed by the Global Reporting Initiative (GRI), along with European Sustainability Reporting Standards (ESRS) developed by the EFRAG (European Financial Reporting Advisory Group), as a useful source of disclosures to the extent that those disclosures meet the information needs of investors. It was noted that allowing entities to use these materials in the absence of a specific ISSB Standard will reduce the reporting burden for companies applying these standards for other purposes but that it was important to ensure that the information presented was consistent with the ISSB’s role of meeting the needs of primary users.

Symmetrically, the ISSB noted during its meeting that the interoperability with draft ESRS would be enhanced if ESRS E1, a standard currently being finalised by EFRAG, were to refer to the materials of the ISSB, including Appendix B for S2 (industry specific climate standards) in the development of entity-specific disclosures. The use of Appendix B would facilitate industry-specific disclosures prior to the completion of sector-specific disclosures within ESRS. 

• the ISSB was not asked to vote on the question of referencing the GRI and ESRS Standards at this meeting. This will be discussed with the Jurisdictional Working Group and staff will further consider comments raised by the ISSB during the meeting. This issue will be discussed again at a future ISSB meeting.