ISSB Standards Explained: A Discussion with Emily Freure and David Bottos
Webcast
Join us for a discussion on the new sustainability standards from the ISSB.
The International Sustainability Standards Board (ISSB) released its first set of finalized sustainability and climate disclosure standards at the end of June 2023. In this episode of the Sustainable Leading Edge, we deep dive into the new ISSB Standards – what they are, why they’re important, where companies can start, and much more.
Don’t miss this discussion on the ISSB Standards with host David Bottos, Product Solutions Specialist at FigBytes, and Emily Freure, Business Analyst at FigBytes.
The Sustainable Leading Edge explores how business can be the driver for the shift to the net positive, regenerative, and inclusive economy and society we require to recognize the changes we want to see in the world.
David Bottos
Hello and welcome to the Sustainable Leading Edge podcast, where we explore how business can be the driver for a shift to a net positive regenerative and inclusive economy and society. The podcast is presented to you by FigBytes, most comprehensive software platform used to manage your environmental, social and governance performance. My name is David Bottos and I’m a product solution specialist at FigBytes, and I’m honored to be your host today. Joining us to talk about the newly formed standards from the International Sustainability Standards Boards
or ISSB, is Emily Freure. Welcome, Emily.
Emily Freure
Hi, David. Thanks for having me on the podcast.
David Bottos
Absolutely. It’s a pleasure. Can you tell us a little about yourself and what you do at FigBytes to start things off?
Emily Freure
Absolutely. So as David mentioned, my name is Emily Freure and I am a business analyst here at FigBytes. My focus is on implementing new frameworks as well as platform improvements and enhancements. I drip my toes into a lot of different things, a little bit of a jack of all trades, which I’m sure is what brings me to the podcast today.
David Bottos
Excellent. So we can talk about anything we want. That’s right.
Emily Freure
Yeah, absolutely.
David Bottos
As I mentioned off the top, ISSB just issued their inaugural standards, IFRS one and IFRS two earlier in the summer. In June, on June 26th of 2023.
The standards aim to help improve trust and confidence in company disclosures about sustainability inform investment decisions and create a common language for disclosing the effect of climate related risks and opportunities on a company’s prospects. So with a little bit of that background. I wanted to start things off, Emily, by asking, with the release of those first two standards, what advice would you give any sustainability leaders diving into them for the first time?
Emily Freure
Sure. That’s a great question. So what comes to mind first here is for many companies, this is going to require a considerable amount of thought and resources to implement. Just to start off, currently, not all of this is mandatory, but the Government of Canada and various regulatory agencies have repeatedly voiced their support and movement towards mandatory climate related financial disclosures. So what it brings me to is if not now, when it’s evident that in some near-future Canada, we’ll start to incorporate some elements of the standards into Canadian reporting, require it. So to me, to prepare for increasing expectations and requirements, it would make a lot of sense to start now and start to understand what might come for the future.
David Bottos
Definitely. You never know with the SEC. I think we would always expect Canada to follow suit with the States and with the announcements with the SEC and reporting It’s it’s something we’ll expect to see. Can you tell us a little bit about how the new ISSB standards differ from previous sustainability reporting guidelines?
Emily Freure
The most important thing to talk about here is that the new standards fully incorporate the recommendations of the TCFD and also consolidate requirements of many other important sustainability reporting frameworks, because of course the main objective with this was to develop a global baseline for everything. So some of what’s new, which in turn makes it differ from previous guidelines, it introduces temporary relief from various requirements, which includes the disclosure of scope three emissions.
This also includes relief from sustainability related financial disclosure is to be released at the same time as financial statements for the first annual reporting period in which a company applies the standards, another thing that differs is it establishes criteria to identify when a company doesn’t need to provide quantitative information about how their financials affect sustainability related risks and opportunities.
David Bottos
Scope three can be definitely a beast. We actually have a whole another podcast about that topic if you want to check it out previously. So what are some potential benefits for companies if they adopt the new ISSB standards and the sustainability reporting? Why should companies use these new standards as opposed to, older ones that we know and love, such as CDP, SASB, etc.?
Emily Freure
This is a great question, David. I’ve got a few benefits to touch on and they all kind of tie into each other at the end. So the biggest benefit here is this will help to reduce repetitive reporting. So this new approach provides the ability to achieve global comparability and allow jurisdictions to further develop additional requirements in order to meet public policy. So the approach helps reduce repetitive reporting for companies who need to report on multiple jurisdiction requirements.
Second benefit here is that it builds on and consolidates a lot of existing initiatives. So a lot of companies are probably already reporting on TCFD recommendations. SASB standards as well as the CDSD framework. So IFRS one and IFRS two are consolidating and building out on these.
This will help companies to benefit from their investments that they’ve already made in sustainability disclosures, as well as reducing repetitions in reporting like I mentioned previously.
The third one here is that it helps companies communicate worldwide in a cost effective manner. The standards have been designed to provide reliable information to investors, which helps companies communicate to them how they would identify and manage the sustainability related risks and opportunities that they may face, both in the short and long term.
David Bottos
Very interesting. How can these investors and other stakeholders use the information reported under the new standards to make informed decisions about company sustainability practices?
Emily Freure
So with the new standards, they will likely have an impact on things like capital allocation decisions because investors are recognizing the importance of incorporating ESG factors when they look at companies long term. Ultimately, these standards will provide investors with more reliable and comparable information which will enable them to make more informed decisions, allocate capital towards sustainable investments, as well as encourage companies to prioritize sustainability practices.
David Bottos
Excellent. And how do the new ISSB standards impact the way companies report on environmental, social, and governance or ESG data?
Emily Freure
These new reporting standards will prompt accountability and responsibility, since the guidelines are very clear. Companies will have an easier time managing and reporting their sustainability impacts more effectively. The framework will also allow companies to easier identify areas for improvement as well as track progress towards their sustainability goals. Because this framework is adopting bits and pieces of other frameworks, it will give companies their time back as they learn which information is already included when they report for.
David Bottos
Thanks. And how has this been received by investors and stakeholders? Are they responding well to the new ISSB standards and are they look sort of benefits are they seeing from these changes?
Emily Freure
Yeah, absolutely. This is a great question. So the ISSB is being recognized positively because companies and investors are really in need of a common language to report and value their climate and social sustainability strategies. It will provide a comparability of disclosures on a global level, which is very welcomed within stakeholders and investors. An important thing to note here as well is that the IFRS has received numerous feedback letters spanning across six continents. The feedback provided is going to help them continue to build and improve the standards that they are working on.
David Bottos
Very interesting. And what are some challenges that businesses face when it comes to sustainability reporting, whether it’s ISSB or other
frameworks as well?
Emily Freure
There’s three main challenges that I’ve identified here. We’ve talked, we touched on them here and there, but I’ll get into more detail for each one.
So one of the biggest challenges that I’ve identified is surrounding the knowledge gap. So there’s not enough people with the knowledge and skills to engage senior management to be on board with this type of reporting. Now, sustainability teams tend to struggle to communicate the importance of reporting, a.k.a. the how and the why. This makes it harder for senior management to commit to initiatives and budgets surrounding this topic.
although overall the knowledge gap is a complex issue to address, education alone can’t really solve this. An important thing to note here is evolving approaches to recruitment would also be beneficial because it’s important to have folks with a sustainability background on board as well as some organization wide trainings.
Second big challenge that I noticed here when it comes to sustainability reporting is that there’s too many standards and frameworks. So the volume and the complexity of environmental standards make it tough for companies to improve their environmental performance through reporting. It can be really easy for businesses to struggle to get a clear sense of what the right one is to follow. It’s easy to get distracted with reporting to standards that potentially aren’t aligned with your business needs because of how many there are. The good thing is that the industry is moving towards having dominant standards that evolve and cause others to either align with that or to vanish. This is ultimately going to help organizations gain clarity regarding what is important for them to report on.
Third one is something that we’ve touched on a little bit, and it’s scope three. Scope three emissions focus on indirect emissions that occur in their value chain rather than the direct operations of the organization. And because of this, it lacks reliable data. So there’s varying levels of accuracy in this data because organizations struggle to collect relevant data to report for scope three. David I’m sure you know a little bit more about Scope three than I do, but I know it’s definitely a challenge that we face.
David Bottos
Absolutely. It can be a huge challenge for our clients to come up with a comprehensive scope 3 inventory. Gathering that sort of data is a challenge and often times not one that can be easily cracked. Since they don’t have that information available to them.
Thanks for going through our questions about the ISSB. It’s clear to me that there’s many potential benefits that it brings to ESG reporting, but not all with its own challenges. I’m interested, as I’m sure we all are, to see where it goes and
how it gets picked up over the next year or two or even beyond. I wanted to shift a little bit away from my ISSB now and talk a bit about you, Emily, and give a bit of background to the listeners. So to start, what, what inspired you to pursue a career in sustainability and how has your passion for it evolved over time?
Emily Freure
That’s a great question. So I think I’ve always had a little bit of an interest in sustainability, and I think knowing that sustainability is the future made me want to pursue a career in it. So people are people nowadays are more aware of the need for humanity to change its course. And I think in the future it’s also likely that no company will be able to continue without having some sort of committed and authentic focus on sustainability which means the opportunity to be in the field is always growing.
Second thing is a little bit more just broad to who I am as a person, but I want to be a part of the positive change. So I think everyone should be able to make some sort of sacrifice in order to ensure our future so that we can be on the planet as long as we possibly can. Sustainability to me, is a lot about self preservation and ensuring that we can live as long as possible. And I think being in this field and being surrounded by the topic every day has made me more aware of my own habits surrounding climate solutions in my everyday life. It’s also given me opportunity to talk about it more like little things. When someone says, Hey, what do you do for work? It opens up a lot of conversation surrounding climate change, and I think I like that part about being in the field as well.
David Bottos
Very inspiring. I could say the same thing about myself, and you’re actually inspiring me, hopefully your listeners as well. In your opinion, what are some of the biggest challenges facing sustainability professionals today? It’s obviously not all passion and everything’s, you know, all roses. What can be done to address them. Would you say?
Emily Freure
Yeah. So I think the biggest one here is lack of time. I do think this is a common theme across many professions and sustainability is one of them. There is going to be a wide range of responsibility that comes with being a sustainability professional. Those that are tasked with it are going to have to use their skill in a wide variety of different ways just because they have that knowledge base.
Another one is capacity challenges. So there’s only going to be a small amount of people that do have that sustainability, knowledge and skill set and there’s a lot of work to do around it, especially given all of the different types of frameworks and reporting. We can circle back to. So small teams I think, are expected to do a lot of the sustainability work for an entire company, and that company could be huge, so it could get tough to do everything. Lack of knowledge is another one. So many employees start out in this field coming from a different discipline. So myself included, I have more of an interior tech background and then I moved to this field. So a lot of my knowledge is a little bit more self taught when it comes to things rather than someone who has gone to school for this field and knows a lot of background information prior to starting. They’re starting up in their career.
David Bottos
Nice. That’s an intriguing background. It’s difficult to predict where where you’ll end up post school when you’re younger. I know I never pictured myself working for a software company, but it’s definitely worked out, better than I could have ever hoped.
Emily Freure
Absolutely. I agree with you, David.
David Bottos
So what advice would you have for any individuals looking to make a positive impact on the environment, both in their personal lives and in their careers, which we’ve we’ve obviously focused on for most of the podcast here.
Emily Freure
So I think the biggest thing here is to just not overcomplicate it, things like carpooling when you can, taking transit when you can. Another big one is composting. Those are all easy, everyday things that people can do at an individual level. Of course, the government and corporations need to continue to step in, but don’t forget about what can be done at an individual level. Individuals can make an impact when it comes to reducing their carbon footprint. I think you hear a lot of, oh, like I’m the I’m only one person. What can I do? I think that’s a bit more of a harmful mindset. We need to think about it as in if everyone does one thing collectively, we can make a difference. As far as career wise, I would say advice if you’re not in a sustainability career, is to take all of the things you do on a daily basis and ensure to pay attention to those things at work as well. So first thing I can think of is implementing actions into the workplace, i.e. compost programs, things like that. Just take the things that you do every day outside of work, bring it into the workplace, and I think you’re going to inspire others to do the same.
David Bottos
Absolutely. The inspiration of others is a big one. I know I sometimes fall into that trap of, you know, it’s just me or what kind of difference can I make?
But obviously if everybody thought that way or thought the opposite way, we’d have a much, much different world on our hands.
Emily Freure
Yeah, absolutely. And you can really pick one thing, even within sustainability that you’re passionate about helping out. And like I have a lot of people in my network are vegans because production of meat products isn’t good for the environment. So that’s their thing and that’s how they help sustainability. But I’m not a vegan. I prefer to work on some other practices in my daily life.
David Bottos
Absolutely. If you if it’s something that you’re passionate about, it won’t feel like a chore or something that you need to do. It will just come naturally.
That feels like a pretty good note to end things on. Thanks so much for joining us, Emily. We really appreciate you coming on to the podcast today.
Emily Freure
Absolutely. Thanks so much for having me, David.
David Bottos
Thanks, everyone for listening. We appreciate your time. This has been another podcast of the Sustainable Leading Edge presented by FigBytes.