February 27, 2024

Last week, the IFRS held its annual Sustainability Symposium in New York, offering a platform for stakeholders to delve into the nuances of sustainability reporting standards. Our CEO Malin Lindfors Speace and Head of Sustainable Finance, Jonathan Milläng summarized the event.

Navigating Sustainability Standards: ESRS vs ISSB Comparison

At the heart of the discussions were the ISSB's IFRS S1 and S2, likened to the European Sustainability Reporting Standards (ESRS) but with distinctive features. Key among the differences between the ESRS and ISSB frameworks is their approach to materiality. While ESRS embraces both financial and impact materiality, ISSB's focus lies predominantly on financial aspects, excluding the impact perspective. This delineation underscores a fundamental contrast in global sustainability reporting strategies.

Simplifying Sustainability Reporting: Insights into Streamlining Standards

The Symposium opened with an address from Bank of America's CEO, Brian Moynihan, who voiced strong support for the ISSB framework. Moynihan highlighted the potential of ISSB to streamline sustainability reporting standards by integrating various standards, including the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD), into one cohesive framework. However, his remarks were met with protests from Climate Defiance, underscoring the complexities and tensions surrounding standardized disclosures.

One prevalent concern echoed throughout the event was the risk of losing the clarity achieved through consolidated voluntary disclosures. With the emergence of non-standardized, regulated disclosures, there is apprehension about the fragmentation of reporting standards, posing challenges for companies striving to navigate this evolving landscape.

The Balancing Act: Proportionality, Interoperability, and Flexibility in Disclosure Standards

The Symposium also shed light on broader themes shaping sustainability reporting, including proportionality, interoperability, and flexibility.

  • Calls for proportionality emphasize the importance of ensuring that smaller companies and those in the Global South can comply with reporting frameworks, enabling them to access vital capital markets.
  • Interoperability emerged as a focal point, with stakeholders advocating for harmonization of reporting frameworks like TCFD, SASB, and Global Reporting Initiative (GRI) to alleviate reporting burdens.
  • Flexibility in disclosure requirements was highlighted as a means to maintain voluntary reporting practices, diverging from the EU's emphasis on mandatory reporting.

The insights garnered from this event will undoubtedly shape the future trajectory of global sustainability standards, steering towards greater transparency, comparability, and assurance in sustainability reporting.