Global standard setters and regulators are being urged to coordinate and align their sustainability reporting initiatives, in order to create globally consistent disclosure systems, in a new letter issued by the We Mean Business Coalition, a group of sustainable business and investment-focused organizations including BSR, CDP, Ceres, CLG Europe, Climate Group, The B Team, and WBCSD.
The letter highlights the unique opportunities and warns of the potential downsides from misalignment created by the concurrent initiatives of multiple organizations to create rules and standards for companies to communicate their sustainability status, progress and plans to investors and other stakeholders.
The letter addresses the sustainability reporting initiatives of the US Securities and Exchange Commission (SEC), the European Financial Reporting Advisory Group (EFRAG) and IFRS’ International Sustainability Standards Board (ISSB). Each of these organizations are currently working to release new Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. More and climate disclosure standards and rules over the next year, including the SEC’s plans to introduce climate reporting requirements for US corporations, EFRAG’s ongoing development of European Sustainability Reporting Standards for the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD), and the ISSB’s plans to introduce international standards for company sustainability and climate related disclosures.
The letter is also addressed to the Global Reporting Initiative (GRI), one of the leading organizations promoting standardized Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. More reporting, who recently announced an agreement with the IFRS to align their capital market and multi-stakeholder standards for sustainability disclosure.
The coalition states:
“To deliver on the Paris Agreement, The Glasgow Climate Pact and keep alive the chance of restraining global temperature rise to below 1.5ºC we need a new global baseline reporting standard on sustainability disclosures. Transparent, consistent and robust reporting is essential for businesses to demonstrate their progress in cutting emissions wherever they are based; for responsible investors to know where to direct their capital and for society to understand how quickly progress is being made towards science-based climate goals.
“With each of your initiatives advancing simultaneously, 2022 is a unique opportunity –and perhaps the last chance to get this right.”
The We Mean Business Coalition letter highlights several of the benefits from alignment, including enabling the most cost-efficient reporting solutions for companies, minimizing the risks of greenwashing, offering the clearest possible picture to investors looking to invest in sustainable companies globally, and delivering a high degree of accountability for corporate climate reporting. On the other hand, the letter warns that “even small misalignments around terminology, definitions, and concepts in the draft versions of the standards and legislation risks undermining their collective impact.”
The letter states:
“By working together, we will unleash the potential of corporate climate leadership in pursuit of our shared goals of halving emissions by 2030 and securing a just, sustainable future for all.”
Click here to view the letter.
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