The signatories to the letter point out that preparers and consumers of environmental, social and governance (ESG) data all over the world are struggling with a profusion of reporting frameworks and standards that do not enable consistent and comparable disclosures. At the same time, the standardisation that has taken place in financial reporting has proved to be a success. Therefore, the letter expresses strong support for the initiative of the International Financial Reporting Standards (IFRS) Foundation to create an International Sustainability Standards Board (ISSB) to develop globally accepted standards for sustainability reporting that can be adopted worldwide.

The letter also acknowledges that there are jurisdictions that are more advanced in their ESG reporting initiatives and might want to go further and faster to meet specific policy priorities. Therefore, the 57 organisations support the International Organisation of Securities Commissions (IOSCO) and the IFRS Foundation in their recommendation of a ‘building block approach’ for the establishment of a globally-consistent foundation of sustainability standards, upon which national and regional standard-setters may build supplementary standards that serve their needs. They also note that this building blocks approach has recently been endorsed by G7 and G20 finance ministers and central bank governors. The letter notes:

Global alignment of reporting standards is crucial to provide a comprehensive view of a company’s sustainability performance. We encourage the European Commission to support the establishment of the International Sustainability Standards Board and actively and urgently promote cooperation between EFRAG and the new Board. Increased international cooperation in aligning and harmonising sustainability reporting standards is essential to ensure a global level playing field.

Finally, the letter points to IOSCO’s proposal for a multi-stakeholder consultative committee to operate within the IFRS Foundation structure to help promote consistency and comparability with jurisdiction-specific reporting standards. The appropriate presence of multilateral bodies and major stakeholders in such a body, including the European Commission, could provide the necessary support for achieving a global baseline and an effective mechanism for cooperation with national or regional standard-setters.

Please click to access the full letter on the World Economic Forum website.