Today we must speak of “system value”, where the company cannot, nor must, play an isolated role, but must carry out its activities taking into account its social license to operate, while society operates within planetary limits. .
The responsible finance movement plays a key role in promoting the creation of this new system, directing financial resources towards companies that have understood the true role they play within this new model and punishing those that still see themselves as agents. independent. Today, the Responsible Investment Principles have more than 4,460 signatories managing $ 121 trillion of assets globally (PRI, 2021).
While these figures are encouraging, let us consider that this movement will only be able to maximize its potential if it can feed on its main raw material: information. The data that companies report on their environmental, social and governance (ESG) performance is gasoline — or, as we’re talking about sustainability, electrons — that power the engine of capital markets.
The creation of a global body for the standardization of ESG information is the only solution that will allow information to flow from the company to investors, so that they can use it efficiently and effectively, maximizing the aspirations of the responsible investment movement and contributing positively to sustainable development.
One of the advertisements The less sexy —but no less important— of the first week of COP26, was precisely the creation of this type of body. The IFRS Foundation, which for decades has created standards for companies in more than 140 countries to report standardized information on their financial performance, announced the creation of the International Sustainability Standards Board (ISSB).
The ISSB will aim to standardize the information that companies report to their investors on ESG issues. Without fear of exaggeration, this is possibly the most important change in the way companies communicate with their investors in almost 100 years, when in the 1930s financial disclosure standards began to be established in the face of the Great Depression.
The formation of the ISSB and the fact that it will base its work on existing – but so far voluntary – frameworks and standards such as the Task Force on Climate-Related Financial Disclosures (TCFD), the Integrated Reporting Framework and SASB Standards — have been applauded by the G20 and finance ministers from 40 jurisdictions, including the United States, the European Union, Japan, Mexico, Chile and Brazil.