People:Emmanuel Faber
The idea that the SASB standards could be used as a lighter set of standards for SMEs, while the ISSB will build on those to create a 'fuller' set of standards for larger companies, could be discussed and explored by the ISSB, Emmanuel Faber suggested during the board's first meeting in Frankfurt.
The meeting was held today (20 July) and the board discussed a staff paper ISSB consultation on agenda priorities (2022).
During the discussion, Faber, who chairs the ISSB, said an important area of the work of the board going forward will be around "how to intertwine industry-based standards with the thematic that we are confronted with through the momentum".
By industry-based standards, understand SASB standards which are onboarded by the IFRS Foundation following the integration of the Value Reporting Foundation in the international standard setter. And by momentum, understand the political considerations around sustainability in different jurisdictions globally.
"Many jurisdictions are looking at themes as opposed to industry-based so we need to create that connection," Faber said.
He suggested that one avenue that could be explored – for the board to discuss – was to use the SASB standards as an "an entry level [standard] in the proportionality for SMEs and developing and emerging economies", and the ISSB would build on those to create a fuller set of standards for larger companies.
SMEs and SMPs have urged the IFRS Foundation "to seriously consider facilitating the inclusion of SMEs within the global sustainability reporting system", from the onset of the standard setting process.
Responding to the international standard setter consultation on sustainability reporting in December 2020, EFAA for SMEs wrote: "If ISSB standards are to be applicable to SMEs, or that the ISSB develops standard specifically for SMEs in a similar way to the IASB and IFRS for SMEs, then the ISSB may need to be supplemented with a new arrangement to systematically represent the SME sector. For example, a sub-committee of the new ISSB may need to be formed, with its chair a member of the ISSB. And even if SMEs were to be (inappropriately) scoped out of the ISSB standards, there would still be a strong case for more SME and SMP voices on the ISSB."
It continued: "We must avoid a rerun of the experience with IAS/IFRS, where SMEs were not initially factored into the objectives and activities of the IASC/IASB and were only belatedly 'onboarded' with IFRS for SMEs."
A message which EFAA reiterated in an interview with Corporate Disclosures.
The ISSB board will reconvene tomorrow to discuss the feedback received so far on its sustainability standards exposure drafts, the consultation deadline being 29 July.
Corrected: This article was updated as it mistakenly stated the ISSB consultation deadline was 29 August.
