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ITF calls for support for the ISSB

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13 Dec 2021

The industry-led Impact Taskforce (ITF) invited by the G7 Presidency to help answer the question of how the volume and effectiveness of private capital seeking to have a positive social and environmental impact can be accelerated has published its final report.

The report notes that the opportunity to mobilise private capital for public good at an unprecedented scale is real. While a fragmented approach undermines momentum and disclosure of non-financial information remains unfit for purpose at the moment, formation of the IFRS Foundation's International Sustainability Standards Board (ISSB) is hailed as good news. The ITF calls on governments to support and participate in upcoming consultations, ensuring that the ISSB: has an inclusive governance model; balances social and environmental issues; acknowledges and reflects realities of both emerging and developed economies; actively engages small and medium enterprises (SMEs) along the value chain; and is swiftly followed by an assurance regime for all data relevant to enterprise value for public companies.

The ITF also urgently calls for mandatory accounting for impact as a destination and notes that the journey to this goal will require: greater transparency, building on harmonised standards, strong mechanisms to ensure integrity of data, analysis and governance. The report analyses theses aspects as follows:

Transparency

  • Mandatory impact disclosure is necessary to achieve the SDGs and accelerate behavioural change in capital markets.
  • While mandatory reporting rules are being rolled out, voluntary disclosure practices must improve to meet today’s urgent social and environmental challenges.
  • Investors should be transparent too.

Harmonisation

  • A global reporting “baseline” should cover, as a minimum, social and environmental impacts that affect enterprise value.
  • Endorsing a baseline is not enough; governments should urgently “build” on the global baseline and push for standards that explicitly recognise and incorporate the impact on all stakeholders.

Integrity

  • Putting in place secure, interoperable data infrastructure is essential for telling the full story.
  • Decision-making processes must include those most affected; to ensure impact integrity, a wide range of stakeholders should inform and participate in decision-making.

Small and medium enterprises

  • Successful impact transparency, harmonisation, and integrity will rely on the inclusion and engagement of SMEs.

Emerging markets

  • Capital markets want better information on impact for all stakeholders – and in an increasingly interconnected world, this must include truly global voices.

The report sums up the key messages as follows. There is an urgent need to narrow the gap between rhetoric and delivery. Private capital and enterprise are playing a critical role. The challenges should not be underestimated, but there is a window of opportunity.

Please click to access the full report on the ITF website.

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