New ISSB Chair Speaks on Sustainability Within the Standards

Emmanuel Faber was appointed as the inaugural Chair of the newly created International Sustainability Standards Board (ISSB) in December 2021. He discusses his role, the work of the ISSB and the impact of sustainability with the Standards. This is the last of a two-part installment.

What are you most looking forward to and what do you see as the biggest challenges in your role in 2022?

I’m looking forward to many things: getting to know my new colleagues, both those at the IFRS Foundation and those working for the two organisations—the Climate Disclosure Standards Board and the Value Reporting Foundation—who are currently in the process of becoming part of the Foundation and the ISSB team; and engaging with the many stakeholders that will become so incredibly important to the ISSB’s success.

The immediate challenges are to get the ISSB up and running. We are making good progress―Sue Lloyd has been appointed as Vice-Chair and Janine Guillot as my Special Advisor. I’m also working with the IFRS Trustees to appoint a diverse group of other ISSB members from around the world. Another key challenge for us is finding the right balance between working quickly to meet the demand for the standards while ensuring stakeholders have enough time to consider our proposals and share their views with us.

What does success look like in the first year?

Our mandate and strategic direction set out by the IFRS Foundation Trustees are clear. Success is getting a diverse and inclusive ISSB up and running quickly so that we can meet the ambitious timeline of publishing proposals by the end of the first quarter this year, with the view of having the first final standards ready as soon as possible.

Another measure of success will be the level of engagement with and feedback from our consultations. Sustainability is by nature a multi-faceted topic and it is crucial that we get feedback from all those with an interest in companies’ reporting on sustainability matters to the financial markets to help us build consensus, create high-quality requirements and encourage adoption of the standards.

What are the main lessons the ISSB can learn from the IASB?

The ISSB can learn a lot from the IASB! The IASB has developed a comprehensive set of accounting standards that listed companies in much of the world are required to use when preparing their financial statements. It has done that by engaging successfully with a wide range of stakeholders and through high-quality technical discussions. The ISSB will follow the same inclusive and consultative process for developing standards and much of our other activities will also take inspiration from the IASB’s ways of working. While the ISSB will have to find its own ways, our ‘older sibling’ can teach us much.

Linking our work to that of the IASB is essential. We need to work together so we can provide investors with powerful decision-making tools―and to make sure we don’t create big overlaps or holes in the system.

Feedback from stakeholders resulted in the IFRS Foundation Trustees deciding that the ISSB should start with climate but cover sustainability more broadly. Which topics would you like to tackle next?

I personally feel strongly about a range of topics and have always done, such as natural capital and biodiversity. However, the question about what we focus on next will of course be a decision based on stakeholders’ views and made by the ISSB. We plan to do a public consultation to help us create our future work plan and I would really encourage everybody to tell us what they believe we should do.

What difference do you think sustainability disclosures can make in the path to climate action and the ability to reach the objectives set in the Paris Agreement?

A fundamental difference! The Paris Agreement is one of the broadest ever: it encompasses nationally determined contributions and pathways for governments to reduce emissions of carbon, methane and other greenhouse gases within time boundaries. Governments need companies in the private sector to do the heavy lifting required. Investors and their regulators want to understand what companies are doing to reduce their greenhouse gas emissions and how climate matters affect their enterprise value. The ISSB’s remit is to provide investors with the information they need to understand and assess companies’ progress—helping build a globally accepted language about these emissions that will be a foundation for effective dialogue and decision making among all the stakeholder groups of the Paris Agreement.

What are your out-of-work passions?

As mentioned, I’m an avid rock climber. It brings me mindfulness. I also think the discipline it requires helps improve my decision making under pressure.