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World Economic Forum calls for global standardisation and coordination in ESG reporting

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29 Mar 2021

The World Economic Forum (WEF) has released a letter to fellow CEOs calling for support for global ESG reporting standards as the private sector could only make its full contribution to creating a sustainable society through global standards.

The letter notes the developments of the last few months beginning with the WEF publication Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation, then citing the IFRS Foundation consultation on setting up a global sustainability standards board and the statement of intent of CDP, CDSB, GRI, IIRC, and SASB to work together towards a comprehensive corporate reporting system.

The letter states that the same global standardisation and coordination as is already in place for financial reporting is needed for ESG reporting as well so that that companies of any industry or country are comparable and can be held accountable to investors. The letter outlines three steps for achieving this:

  1. An independent global standard setting body should develop ESG standards that can be adopted worldwide. The letter notes that the IFRS Foundation is well positioned to do this and that the WEF supports the proposal to establish a Sustainability Standards Board (SSB) that would sit alongside the International Accounting Standards Board (IASB).
  2. For the standards to be enforced in individual capital markets, regulatory authorities must endorse their use. The letter cites the support of the International Organization of Securities Commissions (IOSCO) for the IFRS Foundation initiative and the suggested "building blocks" approach and welcomes the statements.
  3. For the IFRS Foundation standard setting process to best succeed, it should build on the main reporting initiatives already in use. The letter points at the work of CDP, CDSB, GRI, IIRC, and SASB and notes that the WEF's work has included helping to facilitate the collaboration among the five organisations and that the WEF looks forward to working even more closely with them in support of creating sustainability reporting standards through the SSB.

The WEF, which is also a member of the recently announced IFRS Foundation sustainability working group, concludes its letter by stating:

These, then, are the steps we need to complete to get to system change on ESG metrics. We support this process and the organizations that are working to achieve it. Concretely, we look forward to supporting the IFRS’s Sustainability Standards Board, as appropriate, during its establishment and as it delivers on its mandate. We will promote opportunities for high-level public-private dialogue to strengthen strategic alignment on these objectives and will mobilize corporate support at the chief executive level in the global business community. We also encourage capital market regulatory bodies to work with the IFRS Foundation and IOSCO to support the Sustainability Standards Board.

Please click to access the full letter on the WEF website.

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