The ISSB Sustainability Standards: Simple in words, complex in deeds

A first set of two sustainability disclosure standards (generic ESG and climate) was published by the International Sustainability Standards Board (ISSB) in July 2023. While they are by nature non-binding and voluntary, a number of major jurisdictions (including Australia, Brazil, Canada, Hong Kong, Malaysia, Nigeria, Singapore, United Kingdom) have already expressed their intent to adopt/incorporate them at national regulatory level. The EU, which has also created its own European Sustainability Reporting Standards (ESRS), also claims to have included the ISSB standards in its approach while enlarging it on substantial concepts (materiality, users, verification) and scope (12 ESRS vs 2).

Market participants are still on the lookout, considering the different requirements they may need to comply with. On one hand, there is a global non-binding baseline that can be adopted “à la carte” by regulators (ISSB), and on the other hand, a regional  binding a “gold standard” binding regulation which with extra-territorial dimension that may have a huge considerable impact at global level. Market participants are still on the lookout: Will the ISSB standards be robust enough and, large enough to cover their needs?   

This report examines the ISSB Sustainability Standards, identifying its features, as well as how it compares to the EU’s Sustainability Reporting Standard (ESRS) requirements. The need for continuous dialogue between jurisdictions and standard-setters on interoperability will remain crucial to help users of such Standards navigate between coexisting and sometimes competing requirements In our view, against a complex global disclosure ecosystem, the ISSB will be useful to countries and entities that do not yet have consolidated sustainability reporting standards, helping them understand the data that is required and meaningful for investors, creditors and other stakeholders. The sheer weight of its supporting institutions could provide the Standards the impetus to succeed and prevail, at least in important emerging countries. For jurisdictions with advanced regulatory requirements in place, the ISSB could rather serve as benchmark to calibrate overseas requirements.