Consultation on agenda priorities

Date recorded:

Project introduction and overview (Agenda Paper 1)

The International Sustainability Standards Board (ISSB) will develop its initial work plan subject to public consultation on agenda priorities. The ISSB intends to publish a Request for Information (RFI) in the second half of 2022. With the objective of identifying near-term priorities, the RFI will seek public views on (a) the strategic direction and balance of ISSB activities, (b) the suitability of proposed criteria for assessing the priority of sustainability-related matters and (c) a preliminary list of potential priority matters.

The approach to developing a list of potential priority matters to include in the RFI involves the following steps:

  • Sourcing information
  • Identifying market needs
  • Defining the scope of proposals
  • Assessment of the proposals against criteria
  • Prioritisation of key matters
  • Publication of RFI

The staff has already completed the first two steps. To identify matters for consideration by the ISSB, the staff has examined a wide range of internal and external sources of input. Then, the staff systematically evaluated the importance of each item identified in the first step in a capital markets context to determine which of these items require further consideration for inclusion in the RFI.

The approach for narrowing down the items for inclusion in the RFI involves defining the scope of proposals, assessing those defined proposals against a set of criteria for inclusion in the RFI and then prioritising key matters. The ISSB will be presented with a proposed ‘short list’ of potential priority sustainability-related matters for consideration at a future meeting.

The ISSB was not asked to make any decisions at this meeting.

ISSB discussion

The ISSB members discussed mainly two aspects of the paper; strategic balance and the criteria for assessing proposals.

A few ISSB members supported the proposal to have the consultation cover the two years after the consultation noting that discussions around sustainability matters are rapidly evolving. An ISSB member commented that the strategic question should not only focus on what to work on, but it should also take into account how best to do things. Another ISSB member cautioned to be specific when mentioning stakeholder engagement in the context of the ISSB’s activities so as not to raise expectations of a very broad range of stakeholders. Another ISSB member said it might be good to first think about what the output (e.g. a discussion paper, a research paper or an exposure draft) would be and then think about the ISSB’s agenda.

A number of ISSB members made comments and suggestions around the criteria for assessing the proposals. An ISSB member suggested to prioritise those biggest and longest issues as more important than matters just emerging when considering the importance of matters to the investors. The Vice-Chair commented that the criteria should help the ISSB understand what investors really need. She also pointed out that when preparing the agenda consultation document, the ISSB needs to be clear about how the ISSB is linking any potential projects to enterprise value so that the scope of the feedback would not go beyond the sustainability reporting remit.

A few ISSB members suggesting adding other criteria to those already included in the paper and another ISSB member welcomed the staff proposal to add a criterion to the IASB’s criteria, which focuses on the relevance of the matter to the reporting requirements in force in international jurisdictions. However, one ISSB member commented that the criteria, including its structure, should be simple and should not contain a long list of criteria especially where it is not obvious how they relate to each other.

A few ISSB members made comments on the ISSB’s capacity. One ISSB member commented it is important to think about the ISSB’s capacity in terms of not only addressing the potential project but also supporting the implementation of standards because that is very critical for emerging economies. Another ISSB member suggested outsourcing some of the ISSB’s work because of limited resources within the ISSB. The Vice-Chair responded by saying it is relevant and also that the capacity relates not only to the ISSB’s capacity but also to the stakeholders’ capacity and the capacity constraints often come from the latter.

Items to be considered in development of Request for Information (Agenda Paper 1A)

This paper laid out a preliminary list of items to consider as the ISSB prepares an RFI. The staff has identified these items based on the steps explained in Agenda Paper 1 (i.e., sourcing information and identiying market needs). For each item to be considered, the paper presents an overview, key background information, the market need, primary challenges to addressing the need and the potential paths forward.

The preliminary list of items includes topics that are broadly defined, which will require further refinement and scoping to define specific project proposals. These items include (alphabetically):

  • Biodiversity, ecosystems and nature loss
  • Circular economy, materials sourcing and value chains
  • Climate change
  • Cybersecurity, data security and customer privacy
  • Economic inequality
  • Human capital
  • Human rights
  • Water and marine resources

The list also includes the existing standards and portfolio of standard-setting and research projects of the Value Reporting Foundation’s (VRF) Sustainability Accounting Standards Board (SASB), which are:

  • Industry-based requirements
  • Standard-setting projects
  • Alternative products in the food and beverage industry
  • Content governance in the internet, media and services industry
  • Plastics risk and opportunities in the chemicals industry
  • Human capital; diversity, equity and inclusion
  • Greenhouse gas emissions in the marine transportation industry
  • Renewable energy in the electric utilities and power generators industry
  • Research project, which includes human capital
  • Early-stage opportunities

The preliminary list suggested by the staff also includes potential projecs to be undertaken in coordination with the International Accounting Standards Board (IASB), which are:

  • Conceptual Framework
  • Management commentary
  • Other projects
  • Climate-related risks
  • Intangible assets
  • Pollutant pricing mechanisms

The ISSB was not asked to make any decisions at this meeting.

ISSB discussion

A few ISSB members welcomed the inclusion of the Conceptual Framework as a possible topic, which they thought was very important for understanding what the market needs from the ISSB and what the final set of products would look like in order to help inform the criteria for project-setting. Understanding the overall architecture of the ISSB requirements is critical.

One ISSB member suggested including corporate governance under the broadly defined topics and also commented it would be good to consider if the ISSB’s standards should include a set of ESG topics. Noting there is interconnection in the topics included in the paper across the broadly defined topics and the SASB’s topics, a few ISSB members commented it would be good to see them come together.

The Chair commented that this is an opportunity for the ISSB to consider how the ISSB sees the industry-based standards considering the consolidation of the VRF soon and went on to say that it is the ISSB’s duty to continue to maintain and develop them because they are widely used and they could provide a simpler set of standards especially for SMEs.

One ISSB member questioned whether a list of the topics included in the agenda paper represented candidates for standard-setting because he thought some of the topics are defined too broadly for the ISSB to address effectively. The staff explained that these are just an initial list of broad categories, which were intended to start the discussion, and that the final suggestion would be more narrowly defined.

At a future meeting, the staff will present a proposed list of potential priority sustainability-related topics considering the feedback received.

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