The ISSB, EFRAG and the European Commission have been working together over the last few weeks to develop an interoperability table between the international and European standards, ISSB co-vice chair Sue Lloyd told the Sustainability Standards Advisory Forum at a meeting in Frankfurt yesterday (17 April).
Lloyd said that the meetings between the bodies had "achieved a lot" in bringing the wording closer together between the two standards for the disclosure requirements in 'column B' and in identifying the key topics that differ between the two sets of standards for columns 'A' (ISSB only disclosures) and 'C' (ESRS only disclosures) in the table.
Corporate Disclosures understands that a key stumbling block in the discussion was the number of columns that should be included in the table. EFRAG and European stakeholders have been adamant that there shouldn't be a column for ISSB-only disclosures, on the premise that the ISSB standards don't go further than the ESRS, and a company complying with ESRS would therefore be compliant with ISSB.
A position, ISSB chair Emmanuel Faber told Corporate Disclosures, that was mostly driven by policy reasons.
"At the start of conversations, there were topics on which we were more demanding. But they migrated into column B [...] and then there was column C, where we were willing to avoid the burden of reporting to also integrate some of these items into our own framework, and some items where dropped and others were kept, etc...," Faber said in an exclusive interview. "We ended up in a situation on climate where, with a few exceptions, I think the substance is going to be quite similar."
At yesterday's meeting, Lloyd noted that the key topic that is exclusive to the ISSB standards is financed emissions, whereas the topics that are only in the ESRS disclosure requirements generally relate to impact materiality and existing EU regulation.
"We're trying to reduce the risk of companies needing to do two separate disclosures or gather two different sets of information really to achieve a very, very similar thing", she explained.
Sven Gentner, head of unit for asset management at the European Commission, said maximising interoperability between the two sets of standards was necessary to "achieve the substantive goal" of improving the quality and coherence of sustainability reporting.
"The European Union will probably always go a bit further, given that our legal framework fully includes impact materiality," he said. "We might not be fully aligned in terms of areas we both want to cover but overall we've achieved very good progress and will now have to see where we land on both sides."
The table for now only covers climate disclosures, but as the ISSB produces more standards, similar interoperability exercises will have to be undertaken.
Moving forward, Lloyd said the ISSB team would continue to engage with EFRAG and the Commission to identify more topics that differ between the two sets of standards and to decide whether the respective bodies agree with the disclosure requirements in 'column B'.
As for a date to make the table public, that is still to be determined.
"Ultimately, we need to, between the two of us, decide what's helpful to share publicly to help people navigate from one set of requirements to the other," Lloyd said. "It's a big piece of detailed analysis that's going on, but good progress and that's what we're seeking to achieve."
