Creating a baseline of investor-focused sustainability disclosure

| Leading global investors commend direction of IFRS Sustainability Exposure Drafts

Investors representing over US$53 trillion in assets, hailing from Asia, the European Union, North America and the UK, have commended the direction of the IFRS Sustainability Disclosure Standards Exposure Drafts. In a letter, signed 19 May and sent to the Chair and Vice-Chair of the IFRS Foundation’s International Sustainability Standards Board (ISSB), the investors commended the ISSB’s responsiveness to meeting investor needs for improved sustainability-related disclosures.

The ISSB’s proposals — IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Disclosure and IFRS S2 Climate-related Disclosures — are intended to create a comprehensive global baseline of investor-focused sustainability disclosure, in a drive to put much-needed rigour and standardization into sustainability-disclosure across markets. The proposals are open for consultation until 29 July.

The investors, who form the SASB Standards Investor Advisory Group (IAG), emphasized the importance of ‘comparable, consistent, and reliable sustainability-related data to inform investment and stewardship decisions’, reiterating the importance of an industry-based approach — focused on the drivers of risk and return most relevant to business models in a given industry. Industry-based SASB Standards — which have been adopted voluntarily by businesses and investors around the world — play a key role in providing content for both Exposure Drafts.

Commenting, Richard Manley, Managing Director, Head of Sustainable Investing, CPP Investments — and Chair of the SASB Standards Investor Advisory Group, said:

”Task Force for Climate-Related Financial Disclosure (TCFD) and the SASB Standards-based sustainability disclosures have, over time, become preferred by many investors because they enable investors to better assess how companies are managing 21st century risks and opportunities. We are very encouraged to see the ISSB responding to investor needs by building their proposals so firmly on the TCFD Recommendations and SASB Standards, and commend them for the speed with which they delivered these initial proposals for consultation.”

“Investor Advisory Group members are pleased to see IOSCO, the G7, G20 and the Financial Stability Board recently welcomed the global baseline approach and encourage regulators and policy makers globally to coalesce around these proposals, enabling their use across jurisdictions.”

Carine Smith Ihenacho, Chief Governance and Compliance Officer, Norges Bank Investment Management, and Vice Chair of the SASB Standards Investor Advisory Group added:

”Sustainability-related risks and opportunities vary by industry. A global baseline of standards through which companies can communicate their management of the sustainability-related risks and opportunities most relevant to their operating environment, and most likely to impact financial performance, is essential for investors with global portfolios. We applaud ISSB for embedding an industry-based approach in its proposals.”

Miyuki Zeniya, Head of Sustainable Finance for The Dai-ichi Life Insurance Company, Limited, and Co- Chair of the SASB IAG’s APAC Working Group remarked:

“Prominent investors globally have backed SASB Standards and TCFD Recommendations because they help improve our understanding of business performance on sustainability-related issues. We support the IFRS Foundation Sustainability Disclosure Standards, given their grounding on TCFD Recommendations and the SASB Standards.”