1 Introduction and general comments
The Asset Management Group of the Securities Industry and Financial Markets Association (“SIFMA AMG”) brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds. For more information, visit http://www.SIFMA AMG.org/amg.
Our members are active participants in the journey towards climate-related (and other ESG-related) disclosures and we welcome the opportunity to provide feedback on the ISSB’s draft Standard.
Generally, members agree that there is a need for consistent global disclosure frameworks that require disclosure of corporate-specific financially material, decision-relevant data relating to climate risks. Members note the existence of other leading international voluntary frameworks and standards, including the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD Recommendations”), the Greenhouse Gas Protocol, the Sustainability Accounting Standards Board standards (“SASB Standards”), the World Economic Forum Stakeholder Capitalism Metrics and the Global Reporting Initiative standards. In addition, many entities are subject to climate disclosure regulations now required – or under development – by their home country regulators and governmental authorities, such as the EU Sustainable Finance Disclosure Regulation / Taxonomy Regulation and the UK’s mandatory TCFD reporting.
Globally consistent approaches to climate and other sustainability disclosures are pivotal to prevent the proliferation of competing regimes that are not aligned, increasing the cost and complexity of preparation, impairing reliability and making comparisons more time consuming and confusing for users. Towards that end, members support the development of standards that are based on a global minimum of common cross-industry and industry-specific metrics, as well as common principles around methodologies underpinning such metrics. To this end, members are supportive of the Exposure Drafts, which build on the TCFD Recommendations and the SASB Standards.
Members note that the ISSB Standards should also take into account the different levels of preparedness of different sectors and jurisdictions. Finally, members believe it is important that new disclosure standards do not front-run the adoption by companies and their capacity to provide such disclosures.
Consistent with the foregoing, in order to serve as an effective global baseline (i) the ISSB standards must be clear and avoid ambiguity or uncertainty as to their requirements including providing proper clarity in the multiple instances where flexibility is essential; (ii) the ISSB standards must be consistent with and usable for companies reporting under a variety of different local disclosure and liability regimes; (iii) the ISSB standards must be harmonized with other established and emerging disclosure regimes addressing similar topics; and (iv) the ISSB standards should only call for disclosure that companies can accurately produce on a consistent and comparable basis. Members believe certain aspects of the Sustainability Proposal and the Climate Proposal can be better tailored to achieve those objectives, as further discussed in our responses to the specific Exposure Drafts below.