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Start for freeThe Evolution of Sustainable Finance and the ISSB's Milestones
Good morning, afternoon, or evening to those joining us from around the globe. In a recent session hosted by the Peterson Institute for International Economics, we delved into the dynamic world of sustainable finance, spotlighting the progress of the International Sustainability Standards Board (ISSB). This pivotal dialogue, led by Nicholas Veron, featured insights from key figures in the field, reflecting on the ISSB's journey from its inception to its current state.
The Birth of the ISSB
The ISSB, under the umbrella of the International Financial Reporting Standards (IFRS) Foundation, was born out of a pressing need for global sustainability reporting standards. Its establishment was announced at COP26, marking a significant milestone in the quest for high-quality, reliable information for investors concerning sustainability risks and opportunities. The board's inception was a response to the global stakeholders' demand for a harmonized approach to sustainability reporting, aiming to simplify the complex landscape of varying disclosures.
Key Milestones and Progress
Since its establishment, the ISSB has been on a fast-paced journey, consolidating with established sustainability standard setters and publishing its first two standards - IFSS 1 and IFSS 2. These standards are monumental in setting the general and climate-specific disclosure requirements, respectively, and have received endorsement from the International Securities Regulators (IOSCO).
Furthermore, the ISSB has been instrumental in the dissolution of the Task Force for Climate-Related Financial Disclosures (TCFD), integrating its recommendations into the new standards. This integration signifies a holistic approach to climate and sustainability reporting, emphasizing the interconnectedness of climate risks, nature, and social aspects.
The Global Adoption Journey
The adoption of ISSB standards across jurisdictions is a testament to the growing consensus on the importance of sustainable finance. Countries like Brazil, Canada, and Japan are moving towards incorporating these standards, reflecting a diverse global commitment to sustainability reporting. The European Union, while pioneering its sustainability reporting standards, is engaging in dialogues with the ISSB to align and streamline reporting requirements for companies operating in multiple jurisdictions.
Looking Forward
As the ISSB continues to evolve, it remains focused on supporting the implementation of its standards, encouraging global adoption, and expanding its framework to cover industry-specific disclosures and emerging topics such as biodiversity and human capital. These efforts underscore the ISSB's commitment to fostering a sustainable future through informed investment decisions and transparent reporting.
The Role of Political and Social Dynamics
The journey of sustainable finance and the adoption of ISSB standards are not without challenges. Political and social dynamics, including debates on over-reporting and the perceived burdens of ESG initiatives, pose potential hurdles. However, the need for calibrated, relevant, and impactful reporting is undeniable. The dialogue between standard setters, regulators, and stakeholders is crucial in navigating these complexities and ensuring that sustainability reporting effectively supports global sustainability objectives.
As we look towards the future, the role of sustainable finance in shaping a resilient, equitable, and sustainable global economy cannot be overstated. The ISSB's progress and the broader commitment to sustainability reporting standards are pivotal in this transformative journey.
For more insights into the session and the evolving landscape of sustainable finance, watch the full discussion here.
