Our recent webinar welcomed two panellists at the forefront of trying to align international standards:
Sam Prestidge, Strategy Lead at the International Sustainability Standards Board (ISSB). Sam oversees much of the ISSB’s engagement with jurisdictions, including running the Jurisdiction Working Group, the Sustainability Standards Advisory Forum and bilateral engagement with jurisdictions on interoperability, including with the European Union
and
Dr Maria Mora, Head of ESG, Risk and Fraud Solutions at Fujitsu Spain & Member of the EFRAG Sustainability Reporting Technical Expert Group. At Fujitsu Maria leads initiatives to leverage AI technologies for regulatory reporting, fraud detection, and risk management, while also spearheading efforts to embed sustainability principles business operations and solutions. As a former member of the EFRAG TEG, member at the IFRS Foundation (ITCG) and current Board of Director's member at XBRL International, Maria has played a pivotal role in shaping global reporting standards with a keen focus on sustainability and digital technologies.
Engaging in an informed discussion, our panelists had an in-depth discussion on how to navigate the evolving landscape of global reporting standards.
Here's how the International Sustainability Standards Board (ISSB) and EFRAG (European Financial Reporting Advisory Group) are working towards a smoother process, in light of the implementation of the Corporate Sustainability Reporting Directive (CSRD).
The ISSB is a key player in establishing a global baseline for sustainability disclosures, to further inform economic and investment decisions. Recognising the parallel development of ESRS (European Sustainability Reporting Standards) in Europe under CSRD, the ISSB has prioritised interoperability to avoid dual reporting for companies – reducing reporting complexity with a more uniformed approach.
While compliance is important, companies that report against both ISSB and ESRS can gain a competitive edge. Investors increasingly value sustainability, and robust disclosures can demonstrate a company's commitment to ESG (environmental, social, and governance) factors.
The future of sustainability reporting is collaborative and focused on clarity. The ISSB and EFRAG are working together will make it easier for companies to communicate their sustainability efforts effectively to a global audience.
Both ISSB and the European Commission (EC) with EFRAG (European Financial Reporting Advisory Group) are actively working to ensure their standards align. This includes efforts such as:
Matching Definitions: Key terms like "financial materiality" are being defined consistently across both sets of standards.
Developing Guidance Material: Joint guidance materials are underway to explain how the ISSB and ESRS fit together with the next update due to be published in May 2024. This will help companies identify common and unique disclosure requirements, making compliance easier.
The ISSB will also publish a practical tool that should provide clarity to companies on how to comply with both standards.
While both ISSB and ESRS aim for alignment, there are some key points to note. The ESRS has a broader scope from a stakeholder point of view, considering the likes of regulators, employees, wider society and community stakeholders – looking beyond financial materiality and honing in on impact.
One notable similarity, however, is that both use the same digital reporting technology (XBRL), fostering a common language for sustainability reporting. The implications around developing technology to further enhance interoperability and general sustainability reporting from a long-term perspective is hard to predict. However, what is clear is that in the short-term, XBRL contributes to a more efficient and transparent reporting landscape which subsequently benefits companies, investors, and other stakeholders who rely on this information.
At this early stage of mandatory disclosure, sustainability reports tend to be more narrative-driven. However, the future may see a shift towards more data-driven and analytical reporting. With regulatory bodies, investor demand and technological advancements, we can expect to see:
Improved transparency: Standardised data will enhance transparency, allowing stakeholders to see exactly how companies are performing on sustainability metrics.
Better decision-Making: Investors and other stakeholders will be able to make more informed decisions based on comparable data – incentivising companies to improve their sustainability performance.
Increased accountability: Data-driven reporting pushes companies beyond the realm of just telling a good story and places increased emphasis on concrete actions.
If you would like to speak to one of our experts about framework mapping and alignment or XBRL please get in touch with our Head of Business Development, Naomi Hawkins.
Black Sun Global is an international stakeholder engagement agency that’s been helping global brands drive change for more than 30 years. At the forefront of corporate communications, we offer integrated solutions, covering strategy, reporting, ESG advisory and digital activation – all powered by insights, technology, and market-leading expertise.
By addressing stakeholder interests, we turn one-way communications into engaging two-way dialogues that deepen relationships, fuel innovation, and drive more sustainable business practices.
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