A positive first step towards a global minimum threshold for sustainability disclosure


Patricia Hutchinson


The ‘Alphabet Soup’ of ESG (Environmental, Social and Governance) is a phrase that, quite frankly, I feel we have all heard enough of. The International Sustainability Standards Board (ISSB) has recently published draft standards to introduce a global minimum standard of reporting. We circulated these within CRUF – and saw a broad range of views.

In March 2022 the International Sustainability Standards Board (ISSB) launched a consultation for its first two proposed standards. 

The purpose of the ISSB’s guidance is to establish a comprehensive global baseline of sustainability disclosures that is designed to meet the information needs of investors in assessing enterprise value. The drafts consist of IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2 – Climate-related Disclosures.

They build on existing guidance in the form of the Task Force on Climate-Related Financial Disclosure (TCFD) and go further to recommend industry-based disclosure requirements. Taking an industry-based approach aligns these standards with the guidance from the Sustainability Accounting Standards Board (SASB), one of the reporting standards that we frequently see used by companies to report key sustainability metrics.

By building on existing reporting frameworks, the ISSB makes these standards more accessible both to companies seeking to use them for reporting and to the investors and analysts who will use the resulting disclosures. Though we expect company disclosure to tend towards any minimum standard, we also expect continued investor pressure to drive this minimum standard forward as investors become ever more aware of the financial impact of different sustainability metrics on profitability. Increasingly, investors and companies are aware that natural resources are not limitless resources, though humanity has in the past treated them as such, and many still do.

CRUF participated in this consultation process and submitted a comment letter in response.

The main points the CRUF raise are:

Caution over timing and the need for due process

CRUF participants strongly support the ISSB, and are eager to see high-quality global standards for sustainability reporting. We welcome the ISSB’s ambition and strong intent to deliver. We are keen for the standards to go through the full Board now that it is quorate , particularly given the investment background of recent appointments. This will allow for high quality debate and discussion which will improve the standards themselves. 

This leads us to recommend that the ISSB revisits the draft standards now that the Board is complete, and we anticipate that this may trigger changes to and the reissuance of draft standards. A brief delay would be a small price to pay for high quality standards, broader support and adoption around the world.

Materiality and the business model

The current draft appears to use ‘significant’ and ‘material’ interchangeably. We would like to see these terms clearly defined, or that the ISSB uses only the term ‘material’, which is well-understood by the reporting community. If ‘significant’ is intended to mean something other than ‘material’ – and as an ex-auditor, I would at first glance understand material to be more important than significant – then  these terms need to be defined so that when it comes to implementing the standards companies, investors, customers and other stakeholders can clearly understand what is disclosed. 

We are keen to see company reporting, across both quantitative and qualitative disclosure, that most successfully communicates matters of value when it takes account of a company’s business model and strategy.  

Sector-based standards

Taking a sector-based approach to standard-setting will, in our view, improve the usefulness of disclosure by improving the comparability of reported information. Particularly, we would like to see standards that: 

  • Capture supply chain impacts in reporting in a way that does not encourage companies to outsource activities with negative externalities.
  • Ensure that issues are included in reporting where they are material, even when they are not explicitly mentioned in a company’s sectoral guidance.
  • Ensure that the impact of the use of a product is reported, as well as any work to limit the impact at the end of a product’s life.
Assurance and audit

We are keen that the ISSB works with the International Audit and Assurance Standards Board (IAASB) to make sure that the IAASB aligns its auditing standards with the ISSB requirements. We want to encourage a breadth and depth of disclosure, and to balance this with the needs of investors who want to have confidence in the reliability of the information reported.

CRUF is in good company in welcoming this development towards more streamlined global sustainability reporting. We received diverse views from our participants, and have remained faithful to this commentary in our response.

We do not envy the ISSB and its task of digesting each of the responses and distilling the best way forward for the guidance itself, but we heartily welcome this step towards a global minimum threshold for sustainability disclosure.

Patricia Hutchinson is the Head of ESG Research at Redburn (Europe) Ltd. She qualified as a Chartered Accountant with the ICAEW at KPMG LLP, where she spent four years in external audit and five years in governance and responsible investment assurance. She also holds an MSc in Neuroscience from King’s College London.

Disclaimer: The views expressed in the blog are those of the author and do not necessarily represent the views of all CRUF participants. To read more about the CRUF’s views on this and other topics, please visit the ‘Our Views’ section of this website.


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