Why IFRS announced the formation of the new organization- International Sustainability Standards Board (ISSB)?
Already the Bible knows of the failure to build The tower of Babel because of the loss of a common language. If we want to succeed, the importance of establishing an internationally recognized set of rules, a common language in financial and sustainability reporting, cannot be overstated.
ISSB will help to deliver a global baseline of sustainability-related disclosure standards, a set of “common language” data points, provide investors, financiers and regulators with an uniform data-set about companies’ sustainability-related foot prints, risks and progress made, to help them make informed decisions.
Frankfurt has been chosen as the seat of the Board and also host the office of the chair. What role does Frankfurt Main Finance play in the whole application process?
Indeed. The Memorandum of Understanding on Establishing the International Sustainability Standards Board (ISSB) was signed in Frankfurt on 2nd March 2022. Frankfurt Main Finance was amongst the signatories, as were representatives of the Federal Government, the State of Hesse, the cities of Frankfurt and Eschborn; all of which also committed funds for the set up.
This broad coalition was crucial for the decision in favor of Frankfurt and its success underlines Frankfurt’s competitiveness in sustainable finance.
Only last year, Frankfurt was chosen at the COP 26 as International Sustainability Standards Board (ISSB)’s seat of the Board and the office of the chair. Frankfurt Main Finance was one of three coordinators of the application process, representing the financial centre.
What are the next steps for ISSB?
The ISSB’s first public consultation― proposed general disclosure requirements standard and a climate disclosure standard—is expected to be published now any day for public comment for a period of 90 days. We are in close contact to help with the outreach. It is a momentous task to build a global reporting standard within a year. That’s what the ISSB is aiming to achieve and that is where we help. Frankfurt Main Finance encourages feedback from all members of WAIFC.
What do you think is the key in green transformation?
Reporting standards are the key for the successful transformation. “What you measure is what you get” is an age-old management mantra. A globally consistent and comparable sustainability reporting baseline is urgently needed, while some flexibility catering to the reality of different jurisdictions is also necessary. Hence financial centres should play a role in setting and educating market participants in those standards.