Emmanuel Faber takes the reins of the organization that will set the international standards for sustainable finance

Posted on Dec 16, 2019 2021 at 11:00Updated Dec 16, 2019 2021 at 11:10

To fight against global warming, companies must be able to measure their impact on the environment and communicate it to the public using a common language. Everyone agrees on this point. But who will develop these international extra-financial standards that will be applied by the majority of companies?

The ISSB (International Sustainability Standards Board) has positioned itself for this purpose. This body, the establishment of which was announced in Glasgow at the international COP 26 summit in November, is the counterpart of the IASB (International Accounting Standards Board) for sustainable reporting. Based in London, the IASB was tasked 20 years ago with developing international accounting standards for consolidated accounts which are applied by around 40 countries, including European countries.

A climate and social business activist

The ISSB has just found its president. It will be Emmanuel Faber. A recruit that makes sense. This former Danone boss, kicked out last March after a standoff with activists and his board of directors, single-handedly embodies a social and societal vision of the company. He defines himself today on his LinkedIn profile as a climate and social business activist. The ISSB’s head office is in Frankfurt and the organization has already planned to have offices in London, Montreal, San Francisco and Asia.

“The ISSB is an opportunity as there is one per generation to meet this need in a world which changes very quickly, where the climate in particular will cause major changes in the coming years” declared Emmanuel Faber.

To constitute the ISSB and give it international legitimacy, three independent organizations that already existed and which developed their own reporting rules merged: the CDSB (Climate disclosure standards board), the SASB (Sustainability accounting standards board) and the Integrated Reporting Framework.

The ISSB plans to release a climate standard that it will submit for public consultation in the first half of 2022, for adoption as a standard by the end of 2022.

The success of this international council will depend above all on the support of the main countries. Will they adopt these standards? For its part, the European Union has already moved forward with its own disclosures, which are broader because it wants to oblige companies not only to explain how climate change presents risks or opportunities for their own economic model but also how their operations affect climate change. EFRAG, the Consultative Group for Non-Financial Information in Europe, has been commissioned by the European Commission to develop European standards. A working group chaired by Patrick de Cambourg, president of the ANC (Accounting Standards Authority) has already completed its preparatory work. From 2022, a first draft of standards will be available for application in 2023 and publication in 2024.

In the United States, the SEC (Securities Exchange Commission), the regulator of the American financial markets, also seems determined to impose its own standards in climate matters. For the first time this year, he told issuers that material climate information in particular has a place in financial statements.

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