International Sustainability Standards Board

International Sustainability Standards Board
Name	International Sustainability Standards Board
Abbreviation	ISSB
Formation	2021
Type	Standard-setting body
Headquarters	Frankfurt
Parent organization	International Financial Reporting Standards Foundation
Leader title	Chair

International Sustainability Standards Board

The International Sustainability Standards Board issues global sustainability disclosure standards intended to align corporate reporting with investor needs and financial markets, bridging environmental, social, and governance information with accounting and financial reporting practices. It was created amid calls from stakeholders including International Organization of Securities Commissions, European Commission, Financial Stability Board, and Group of Twenty leaders to harmonize disparate frameworks such as those from Global Reporting Initiative, Sustainability Accounting Standards Board, and Task Force on Climate-related Financial Disclosures. The board’s work interacts with institutions like the International Monetary Fund, World Bank, Organisation for Economic Co-operation and Development, and national regulators such as the Securities and Exchange Commission (United States) and Financial Conduct Authority.

Overview

The ISSB operates as a standard-setter under the International Financial Reporting Standards Foundation and seeks to produce baseline sustainability-related disclosure standards to serve investors and capital markets, complementing standards from bodies like International Accounting Standards Board, European Financial Reporting Advisory Group, and Asian Development Bank. Its mandate arose from dialogues at forums including the United Nations Climate Change Conference and the COP26 summit, with engagement from stakeholders such as World Economic Forum, International Chamber of Commerce, and large institutional investors like BlackRock and Vanguard Group. The board’s standards aim to integrate with reporting ecosystems influenced by frameworks such as the Carbon Disclosure Project, CDP Investors, Principles for Responsible Investment, and regional initiatives like the European Sustainability Reporting Standards.

History and establishment

The ISSB was announced at COP26 following recommendations from the Financial Stability Board and coordination with entities such as the International Organization of Securities Commissions and philanthropic initiatives like Climate Disclosure Standards Board. Its establishment involved consolidation and cooperation among existing actors including Sustainability Accounting Standards Board, Value Reporting Foundation, and consulting inputs from Big Four accounting firms and advisory groups linked to United Nations Environment Programme Finance Initiative. Key milestones include foundational meetings in London, the inaugural technical agenda setting with participation from regulators such as Monetary Authority of Singapore and policy forums like G20 working groups, and subsequent outreach to markets such as Tokyo Stock Exchange and Hong Kong Exchanges and Clearing.

Governance and structure

The ISSB’s governance is situated within the International Financial Reporting Standards Foundation governance architecture, with oversight relationships to trustees and coordination with the International Accounting Standards Board. Its leadership includes a chair and technical staff drawn from backgrounds at institutions like European Central Bank, Bank of England, International Monetary Fund, and large audit firms. Standard-setting committees and consultative groups engage representatives from Securities and Exchange Commission (United States), European Securities and Markets Authority, Australian Securities and Investments Commission, and market participants including Morgan Stanley and Deutsche Bank. Advisory forums incorporate stakeholders such as United Nations Principles for Responsible Investment, International Trade Union Confederation, and civil society groups like Greenpeace and WWF.

Standards and framework development

The ISSB’s work program developed prototype standards on climate-related disclosures and general sustainability-related financial information, building on concepts from Task Force on Climate-related Financial Disclosures, Sustainability Accounting Standards Board, and Global Reporting Initiative. It issues exposure drafts, seeks feedback from organizations like International Federation of Accountants, Institute of Chartered Accountants in England and Wales, and national standard-setters such as Financial Reporting Council (UK). Development follows due process influenced by norms from International Organization for Standardization procedures and leverages data and scenario work from entities including Intergovernmental Panel on Climate Change and International Energy Agency.

Adoption, implementation, and reception

Jurisdictions and market regulators including the European Commission, Securities and Exchange Commission (United States), Japan Financial Services Agency, and Monetary Authority of Singapore have engaged with ISSB standards as inputs for rule-making, while exchanges such as New York Stock Exchange and London Stock Exchange Group assess implications for listed companies. Corporate adopters span multinationals like Royal Dutch Shell, Toyota, Apple Inc., and Unilever, alongside investors from BlackRock to CalPERS. Professional service firms and consultancies such as Deloitte, PricewaterhouseCoopers, EY, and KPMG provide implementation guidance. Academic commentators from institutions like Harvard Business School, London School of Economics, and University of Oxford have analyzed impacts on disclosure quality and capital allocation.

Criticisms and controversies

Critics from organizations such as Friends of the Earth, Amnesty International, and some national lawmakers argue about perceived gaps on human rights, biodiversity, and scope boundary issues, citing tensions with frameworks like Global Reporting Initiative and regional rules from the European Union. Debates involve accounting firms, asset managers including State Street Corporation and Fidelity Investments, and development agencies like United Nations Development Programme over standard-setting legitimacy, accountability, and the pace of regulatory adoption. Controversies have also arisen concerning coordination with litigation risks in jurisdictions influenced by Securities and Exchange Commission (United States) enforcement and class action precedents, as well as disclosure burdens highlighted by trade associations such as the U.S. Chamber of Commerce.

Relationship with other standard-setters and regulators

The ISSB maintains formal and informal links with bodies like the Global Reporting Initiative, Task Force on Climate-related Financial Disclosures, International Accounting Standards Board, and regional authorities including the European Commission and China Securities Regulatory Commission. Memoranda of understanding and technical collaboration involve institutions such as International Organization of Securities Commissions and Financial Stability Board to promote interoperability with initiatives like the European Sustainability Reporting Standards and national regimes such as the Corporate Sustainability Reporting Directive. Ongoing dialogues include multilateral forums like the G20 and stakeholder coalitions including World Business Council for Sustainable Development to harmonize reporting for investors and markets.

Category:Accounting organizations