ISSB to Focus on Rule Rollouts Over New Standards
Overview
The International Sustainability Standards Board (ISSB) is prioritizing the implementation of its existing standards over developing new ones. This strategic shift aims to ensure widespread adoption and effective application of the current ESG reporting frameworks.
Source: KnowESG
The International Sustainability Standards Board (ISSB), established to create a unified global framework for environmental, social, and governance (ESG) reporting, is now focusing on rolling out its existing standards rather than developing new ones. This decision comes as the board aims to address the challenges of adoption and interoperability across different jurisdictions.
Current Focus: Rule Rollouts
The ISSB has decided to concentrate on helping countries adopt its first two standards, which were issued in June 2023. These standards cover climate and general sustainability reporting. Despite the initial enthusiasm, no country has yet adopted these standards, and only 30 countries are considering them, with notable absences like the United States.
Challenges in Adoption
One of the significant hurdles the ISSB faces is the varying approaches to ESG reporting across different regions. The European Union and China, for example, are developing their own rules that cover more topics in different ways. This divergence means that companies operating in multiple countries may still need to produce separate sustainability reports, leading to increased costs and complexity.
Financial and Operational Strains
The ISSB has been criticized for its high operational costs, including maintaining three headquarters and paying its 14 board members substantial salaries. These financial strains have raised concerns about the sustainability of the board's operations and its ability to achieve its goals.
Interoperability and Future Plans
To address these challenges, the ISSB has acknowledged the need for its future rules to be interoperable with those of other regions, particularly Europe. This requirement limits the board's flexibility in setting new standards. Consequently, the ISSB has reduced its research focus to just two new areas over the next two years: biodiversity and workforce skills.
The ISSB's shift in focus from developing new standards to ensuring the effective rollout of existing ones highlights the complexities of creating a unified global ESG reporting framework. As the board navigates financial and operational challenges, its success will depend on its ability to foster international cooperation and address the diverse needs of different regions.
Source:
https://news.bloomberglaw.com/esg/global-esg-body-prioritizes-rule-rollouts-over-new-standards
