Respondents to the International Sustainability Standards Board’s (ISSB) consultation called for a greater focus on biodiversity and nature as well as progress on social and human-rights related reporting standards.
The ISSB’s 120-day consultation, which was for its next two-year work plan, identified four potential projects based on investor needs. These included biodiversity, ecosystems and ecosystem services, human capital, human rights, and integration in reporting.
To date, over 60 market participants have responded to the request for information, which is due to close on 1 September.
The ISSB noted that biodiversity loss poses a “significant threat to financial stability<2 citing research by the World Economic Forum which projects $44 trillion of economic value generation – more than half of the world’s GDP – is directly dependent on nature and its ecosystem services.
It also underlined that many ecosystem services are not replaceable and studies by bodies such as the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services have found that most ecosystem and biodiversity indicators are already in decline, highlighting the “immediacy of the financial risk” it presents.
Given the size of the potential projects which would limit the progress that could be made across all four projects in two years, the ISSB sought views on the relative priority of activities to determine potential trade-offs.
In its response, the European Securities and Markets Authority (ESMA) said that if the ISSB chooses to focus on a single project over the next two years ensure “significant progress” is made that a project addressing biodiversity, ecosystems and ecosystem services would be a “suitable candidate” for prioritisation.
According to ESMA, the “current momentum” on biodiversity and nature at the international level provides a “positive context for such a project” which could “advance quite swiftly”.
The authority noted the Kunming-Montreal Global Biodiversity Framework (GBF), which was adopted at COP15, and the Taskforce on Nature-related Financial Disclosure (TNFD) as examples of this momentum.
The TNFD is set to publish its final recommendations in September, following the release of its fourth and final beta framework for nature-related risk management and disclosure in March.
ESMA also suggested that the term ‘nature’ could be “more appropriate than ‘biodiversity, ecosystems and ecosystem services’” in describing the scope of the contemplated project, which it said would enable the ISSB to use the ‘biodiversity’ terminology for a more specific focus on biological diversity.
The ISSB has already committed to balance advancing new projects in a timely manner with delivering its comprehensive global baseline of sustainability-related disclosure standards.
These standards have also been endorsed by the International Organisation of Securities Commissions, with it asking its 130 member jurisdictions to adopt them into their respective regulatory frameworks.
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