International Sustainability Standards Board (ISSB)

The landscape of ESG reporting standards has been changing a lot lately, and further movements are expected in the coming months. Well-known standard setting bodies like the Sustainability Accounting Standards Board (SASB), the Climate Disclosure Standards Board (CDSB) and the Global Reporting Initiative (GRI) will over time all merge into the International Sustainability Standards Board (ISSB).

Announced by the IFRS Foundation during the COP26 forum in Glasgow in November 2021, the ISSB intends to meet the demand for “high quality, transparent, reliable, and comparable” disclosures of ESG performance. The primary intent of the IFRS Foundation’s ISSB project is to harmonize ESG standards by creating a thorough global baseline for ESG reporting that is “focused on the needs of investors and financial markets”.

The Board also aims to retain connectivity between the International Accounting Standards Board (IASB) and the ISSB to embed sustainability into core capital market infrastructure on the same level of importance as financial accounting standards.

In November 2020 the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) announced their intention to merge into the Value Reporting Foundation, which was officially formed in June 2021.

As such, the Value Reporting Foundation became a global non-profit organisation that offers a comprehensive suite of resources designed to help businesses and investors develop a shared understanding of enterprise value – how it is created, preserved, and eroded. Their resources include:

• The Integrated Thinking Principles, which guide board and management planning and decision making.
• The <IR> Framework, which provides principles-based, multi-capital guidance for comprehensive corporate reporting reflecting the commercial, social and environmental context in which an organisation operates. An integrated report under the <IR> Framework extends to six capitals combining traditional dimensions such as Financial capital, Manufactured capital, Intellectual capital and Human capital with Social and relationship capital and Natural capital. An integrated report includes eight Content Elements that are fundamentally linked to each other and are not mutually exclusive:
  • Organisational overview and external environment
  • Governance
  • Business model
  • Risks and opportunities
  • Strategy and resource allocation
  • Performance
  • Outlook
  • Basis of presentation
• The SASB Standards, which are a tool to inform disclosure to investors and guide investor decision-making when embedded in investment tools and processes. SASB’s sustainability topics, identified from an initial set of 30 broadly relevant sustainability issues, are organised under five broad sustainability dimensions including (1) environment, (2) social capital, (3) human capital, (4) business model and innovation, and (5) leadership and governance. The SASB Standards encompass a complete set of 77 globally applicable industry standards, including detailed industry-specific disclosure topics and metrics, and addressing sustainability-related risks and opportunities reasonably likely to affect an organisation’s financial condition (i.e., its balance sheet), operating performance (i.e., its income statement), or risk profile (i.e., its market valuation and cost of capital).

On 31 January 2022, the CDSB was consolidated into the IFRS Foundation to support the work of the ISSB.