I am soliciting signatures to endorse a letter from Oxford submitted to the IFRS Foundation Trustees in support of establishing a Sustainability Standards Board (SSB). The IFRS Foundation oversees the work of the International Accounting Standards Board (IASB) which sets standards for financial accounting for most countries in the world. (The U.S. equivalent is the Financial Accounting Standards Board.) In September the Foundation’s Trustees published a “Consultation Paper on Sustainablity Reporting.” The paper proposes that the Foundation establish a parallel body to the IASB, a Sustainability Standards Board (SSB), that would set standards for a company to report on their sustainability performance in terms of the material environmental, social, and governance (ESG) issues that matter to investors. The importance of this proposal cannot be overestimated. Imagine a world without standards for mandated financial reporting. That is the world we live in today for sustainability reporting.
While the formation of an SSB would be a game-changer in the capital markets, it is not the complete solution or a silver bullet. It would not address all of the ways in which companies contribute to or detract from the Sustainable Development Goals. Work here would be complementary to the SSB through the concept of “dynamic materiality.” Sustainability issues that matter to society but not yet to investors can become so over time, slowly or rapidly. But the SSB would be a solid platform for an enormous leap forward to create a sustainable world.
What would this mean for the existing NGOs who have been doing great work in this area? The short version is that the work of Climate Disclosure Standards Board, the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards (SASB) would effectively be folded into the SSB and over time they would disappear as separate entities as the SSB gets solidly established. The IIRC and SASB have already announced a plan to merge into the Value Reporting Foundation, and CDSB has indicated interest in joining them. All three entities have an investor focus.
The Global Reporting Initiative is focused on stakeholders and I see them continuing as an independent entity although coordinating closely with the SSB. The logic behind this is explained more in this Harvard Business Review piece “The Future of ESG Is…Accounting?” For a more technical discussion see “We mustn’t miss this crucial moment to create a global Sustainability Accounting Standards Board” and “Investors need to get behind materiality.”
The Foundation’s Trustees are asking for commentary on their proposal and a number have already been submitted on their website. Most are supportive and some raise some important questions to be addressed. The Trustees obviously want to know if there is sufficient support in the business, investment, and regulatory communities for them to take this enormous step. I know they are also very interested in the degree of academic support. Towards that end, Professor Richard Barker of Said Business School and I are seeking to generate a list of distinguished academics to endorse this Oxford letter—assuming, of course, the person agrees with it. The academic discipline doesn’t matter. The commit to sustainability and sustainable development is the only qualification.
If you are interested in adding your name to the signatories of the Oxford letter, please write to me at Robert.Eccles@sbs.ox.ac.uk. All I need is a quick statement that you’re happy to have your name added to the list. Please give me your name, title, and affiliation as you would like it to be shown. The deadline for submissions is December 31, 2020 so I have set a deadline for collecting signatures of December.
I really appreciate your help on this important initiative.
Robert G. Eccles
Saïd Business School, University of Oxford
Tel: +44 (0) 1865 278822
Mob: +1 (781) 492 0948
Saïd Business School, Park End Street, Oxford OX1 1HP