“Standards setters are not competing with each other, they are competing with technology. But they don’t realize it.”
The following article originally appeared on GreenBiz.com as part of our partnership with GreenBiz Group, a media and events company that accelerates the just transition to a clean economy.
Whatever your take was on COP26, a key takeaway at the intersection of capital markets and climate was the formation of the International Sustainability Standards Board (ISSB). During the initial days in Glasgow, the IFRS Foundation announced the formation of the new board, an organization meant to develop a global baseline of sustainability disclosures for financial markets.
The formation has been widely celebrated in the sustainable finance community — a community that has grown substantially in the past decade and has swelled in the past year.
So what does the formation of the ISSB mean for the evolution and efficacy of ESG reporting? To answer that, I checked in with those who I thought would know better than most: Jean Rogers, founder of the Sustainability Accounting Standards Board (SASB) and, as of this month, global head of ESG at Blackstone; and Robert Eccles, founding chairman of SASB, professor of management practice at Oxford and a founder of the International Integrated Reporting Council (IIRC).
I found their insights on the ISSB to be unique and invaluable; promising, concerning and exciting alike. I think you’ll find their takes illuminating as well.
The following has been edited for clarity and length.
What most excites you about the newly formed ISSB and its ability to shift capital markets and the real economy to one that is clean and just?
Jean Rogers: Consolidation and maturing of the industry are essential. The opportunity to align global markets on an approach to ESG, while allowing jurisdictions to tailor standards to their priorities and point of view. For example, diversity in India is often interpreted as differing abilities rather than skin color. Decarbonization has a different meaning in Malaysia than in Canada.
Bob Eccles: Financial accounting standards and reporting requirements have created the deep and liquid capital markets we have today which have generated substantial wealth. But the information shaping these markets is now too narrow and too short-term for the capital markets to contribute to a sustainable society. Resource allocation decisions by companies and investors need to change, and the standards developed by the ISSB will give both the information they need to do so.