Sustainability is hitting the ground running in the midst of incessant climate change, sustainability related risks, and business efforts to comply with the new environmental legislation and to appeal better to potential investors and customers.
👉 What is the International Sustainability Standards Board, otherwise known as the ISSB – and how do they help to promote sustainability around the world?
What is the International Sustainability Standards Board (ISSB)?
The ISSB, known as the International Sustainability Standards Board – was announced last November in Glasgow at COP26 as an effort to develop a superior standard for future disclosures regarding sustainability in order to help investors and potential stakeholders. It is built upon standards from the Sustainability Accounting Standards Board, otherwise known as the SASB – and IFRS Sustainability Disclosure Standards.
One of the goals of the ISSB is to create a global baseline for sustainability disclosure standards. This can be achieved through colloboration with the Global Reporting Initiative (GRI), helping emerging and developing economies, rerferencing European sustainability reporting standards, addressing a wide array of related risks and opportunities in disclosed sustainability data.
👉 The International Organization for Securities Commissions (IOSCO) recently gathered in April 2023 to work towards this goal.
The International Sustainability Standards Board, or ISSB for short, is a sustainability board aimed at improving upon the already-existing reporting directives and sustainability reporting – such as the NFRD or CSRD.
The ISSB also works closely with the Climate Disclosure Standards Board and the TCFD, otherwise known as the Task Force for Climate-related Financial Disclosures.
In short, the ISSB is determined to promote the importance of transparency and sustainability around the world in order to cultivate a more secure, honest financial market for investors by developing the most innovative sustainability disclosures to date.
Why was the ISSB developed?
The ISSB was developed back in 2021 after two major requests were made for improved global sustainability by Trustees from the IFRS foundation. The speed of the creation of the ISSB was astounding, considering that a sustainable development standard was only pitched a year prior to COP26 in Glasgow.
👉 This shows that market participants were eager to develop new sustainability strategies and disclose sustainability related financial information.
The need for sustainable development and to disclose sustainability information has never been as strong as it is now. In the midst of climate change, sustainability could help to better all forms of life on planet Earth by aiding in the protection of our vital ecosystems, preserving natural resources, encouraging the use of renewable energy, and ultimately by creating a less volatile home for future generations.
Therefore, sustainability in the commercial world has never been more imperative – as the industrial revolution propelled us towards a world of incessant manufacturing that has no mercy on the planet.
The good news about upcoming ISSB standards is that there is international applicability, and it could help pave a global path towards sustainability by requiring companies to comply with their sustainability standards and draft disclosures. This is more important now than ever as the world isn't doing too well in the fight against climate change. However, the bad news is that some companies still don't possess the intrinsic motivation necessary to implement sustainability into their business models – meaning standards like the ISSB are essential if the world wants to mitigate the negative impacts of climate change.
How does the ISSB provide incentives for companies that aren't becoming sustainable on their own? How do they ensure companies share their financial performance (as financial reporting is linked to climate related risks) and climate related disclosures?
How does the ISSB work?
The ISSB works as a private-sector and independent entity that helps in the development of IFRS Sustainability Disclosures, otherwise known as IFRS SDS, by overseeing the operations of the IFRS Foundation.
👉 Typically, the ISSB has a board consisting of 14 members – but they aren't all always full time staff of the ISSB. These members are scattered across the world in order to ensure global awareness regarding sustainability: by requiring three members in the Asia-Oceania region, three members in Europe, three in North and South America, one member in Africa, and the other four members to be dispersed anywhere else in the world.
Under the jurisdiction of the IFRS, the ISSF is able to have complete control over all sustainability-related matters: including complete power to create and pursue any agenda to collaborate with various trustees or the public to improve transparency and sustainability measures, and the ability to create and issue sustainability disclosures. For example, the ISSB could create standards regarding suppliers that all companies will be required to comply with.
What are the predominant goals that the fourteen board members of the ISSB strive to achieve?
What are the main goals of the ISSB?
One of the main purposes of the ISSB is to illustrate pivotal topics regarding sustainability, such as ESG (or environmental, social, and governance) factors or corporate social responsibility so that potential investors can be provided with all of the information necessary in order to make a wise and ethical investment.
The main priority of the ISSB is to encourage the disclosures of environmental impact, as this is the most time sensitive and crucial matter that all investors will have to carefully educate themselves on and adhere to in order to remain sustainable.
In addition to influencing investors to seek sustainable investments and to promote the global importance of transparency in businesses, the ISSB also strives to create new requirements to be implemented across the industry as an attempt to promote greater world-wide sustainability.
Ultimately, the main goal of the ISSB is to create global sustainable standards for all businesses from already implemented international standards such as incentives already in place by the CDSB, or the Climate Disclosure Standards Board, and the TCFD, or Task Force on Climate-Related Financial Disclosures, VRF – otherwise known as the Value Reporting Foundation.
These various entities are meant to help the ISSB draft a cumulative standard, so that by 2023 – companies have one guideline to follow instead of needing to resort to a multitude of organizations for expertise on sustainability disclosures.
👉 Think of it like studying for a final exam, and wanting to make sure you remember everything from the course throughout the entire semester. Sure, it's possible to go over every old homework assignment, class worksheet, test, or quiz – but it's easier to study from one singular study guide. That's what the ISSB strives to make possible for companies around the world, except in terms of sustainability and transparent disclosures aimed to improve both the financial market and the environment.
The ISSB is determined to provide all potential investors and companies with a superb reporting system for sustainability, so that everyone financially involved in a project can make better decisions regarding sustainability – and so that imperative sustainability measures like ESG values and disclosures no longer go unnoticed when the world should be paying attention to them the most.
The ISSB will also help to build more sustainable businesses, as investors will start to stray away from companies that do not comply with the recommended sustainability measures set forth by entities such as the ones collaborating with the ISSB.
Is the ISSB full-proof in aiding in the creation of sustainable development, or does it face roadblocks that could deter the possible success of the ISSB?
What are the pros and cons of the ISSB?
The overarching pro of the ISSB is that it will make environmental discrepancies more well known – such as companies that contribute to ozone depleting substances and landfill. Basically, ISSB will make clear which companies are sustainable and worth investing in – leaving those who don't get on board with sustainability to financially suffer the consequences.
However, the ISSB isn't perfect – as it is a new entity that still has a lot to learn and adjust to in today's financial market. The ISSB could do good by observing the patterns of failure and success by the SEC, or the U.S. Securities and Exchange Committee – as they are also dedicated to protecting investors and guiding them towards more responsible investments.
The ISSB is so new, that it's too soon to tell if it's wildly successful – however, it's prevalent that the potential is there. Is there anything you or your company can do to represent the values of the ISSB and work towards global sustainability?
How can you get started with sustainability?
The truth is, if everyone thoroughly recognized the importance of sustainability – the ISSB wouldn't be as necessary.
The primary problem, and reasoning for the creation of the ISSB – is because most companies prioritize financial gain over implementing sustainability, and will often go to the extent of greenwashing in order to promote their “sustainable values” so that customers continue to purchase their products or services without the added environmental guilt.
In short, the ISSB isn't necessary in order for the original objective to still be met – increasing the awareness and importance of global sustainability, especially within companies as they serve as one of the largest contributors to excessive greenhouse gasses and carbon emissions.
While sustainability may initially seem daunting, the good news is that since so many companies around the world are getting involved in implementing sustainable measures – that there are more examples in how to get started with sustainability and keep the momentum than ever before.
How can your organization get started in its journey towards sustainability? Here are some easy first steps to get started with sustainability in your company.
Set Attainable Goals
Whenever anyone sets out to achieve something, the biggest and most common mistake they make is setting their goals too high.
Sustainability is a journey that should be done slowly but surely in order to guarantee long-term success.
For instance, you could set a small goal for you and your team to use reusable water bottles and mitigate the use of plastic for an entire week. Repeat this goal in small increments, alongside other sustainability initiatives, until it is clear they can be permanently implemented.
Make Your Sustainable Goals Personal
There's a reason why they say to pick a job that you love so it never feels like you work a day in your life.
The same goes for your company's sustainability goals; it's vital to personalize your incentives to match the mission of your company so that all employees will feel compelled to achieve your new sustainability goals.
Don’t Ignore the Numbers
Setting numerical based goals can help you and your company work towards sustainability.
It's similar to people who go to the gym and don't measure or weigh themselves – how do they know that their new tactics are helping them to achieve their fitness goals? It's the same concept with sustainability – seek to measure your efforts in order to track if you are truly reducing your environmental impact over time.
Recruit the Help of a Third Party
Companies like us at Greenly can help you find out which areas you emit the most in through our scope emissions calculators, and also help you to draft the reports necessary to apply for other environmental accreditation – such as those in the ISO series.
👉 The best part is, companies like Greenly can help create a personalized plan to help you reduce your emissions and implement sustainability.
The ISSB is going to make sustainability reporting and transparent disclosures more compulsory throughout the market, with an ultimate goal to incentivize companies to improve their sustainability measures. Even if the ISSB continues to be successful, it's important to know what to do to become more sustainable – as the ISSB is dedicated to increasing awareness on sustainability and making it the new norm around the world.
What about Greenly?
If reading this article about the International Sustainability Standards Board, or the ISSB, has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
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