ISSB is meeting in Montreal to advance the IFRS Sustainability Disclosure Standards ahead of their publication in 2023 and made progress on several topics relevant for the work of COP15 on Biodiversity, simultaneously taking place in Montreal, Canada.
From ESG to sustainability
To evolve from the currently fragmented ESG disclosure landscape,
that lacks connectivity and has conflicting concepts, to a truly global
common language of sustainability-related financial disclosures, the
ISSB agreed during its October 2022 meeting
that it would be beneficial to ground its standard-setting work by
clearly articulating the relationship between sustainability matters and
financial value creation.
In its session on 13 December 2022, the ISSB agreed how to describe
sustainability and clarified that a company’s ability to deliver value
for its investors is inextricably linked to the stakeholders it works
with and serves, the society it operates in, and the natural resources
it draws on.
The decision builds on concepts from the Integrated Reporting Framework,
which helps companies articulate how they use and effect resources and
relationships for creating, preserving and eroding value over time.
Sustainability will be described in the ISSB’s General
Sustainability-related Disclosures Standard (S1) as the ability for a
company to sustainably maintain resources and relationships with and
manage its dependencies and impacts within its whole business ecosystem
over the short, medium and long term. Sustainability is a condition for a
company to access over time the resources and relationships needed
(such as financial, human, and natural), ensuring their proper
preservation, development and regeneration, to achieve its goals.
By referring to this articulation of the value creation process, a
company will be better placed to explain to its investors how it is
working sustainably within its business ecosystem—addressing the
impacts, risks and opportunities that can affect its performance and
prospects—to ultimately deliver financial value for investors.
Addressing natural ecosystems as it relates to climate
Having heard strong feedback on the connection between climate and
nature, including cultivated and natural biodiversity, deforestation and
water—and subsequently decided during its October meeting—the ISSB will
research incremental enhancements that complement the Climate-related
Disclosures Standard (S2), including relating to natural ecosystems and
the human capital aspects of the climate resilience transition (just
transition).
ISSB
© IFRS Foundation
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