$50 Trillion at Stake: IIGCC Proposes Controversial SASB Standard Adoption

IIGCC Proposes Incorporating SASB Standards into EU Sustainability Reporting

In a move to harmonize global sustainability reporting, the Institutional Investors Group on Climate Change (IIGCC) has floated the idea of "explicitly incorporating" the sector-specific disclosure standards developed by the Sustainability Accounting Standards Board (SASB) into the European Sustainability Reporting Standards (ESRS).

The IIGCC, a prominent European investor group representing over $50 trillion in assets, made the recommendation in its response to the International Sustainability Standards Board's (ISSB) public consultation on adopting the SASB industry-based standards. Investors have long called for more standardized and comparable sustainability data across companies and jurisdictions.

According to the IIGCC, explicitly referencing the SASB standards within the ESRS framework would help ensure the EU's new corporate sustainability reporting rules are "globally aligned" and provide investors with the decision-useful information they need. The SASB standards, developed over nearly a decade, offer industry-specific metrics that allow for more apples-to-apples comparisons between companies.

"Explicit incorporation of the SASB standards within the ESRS would be an important step towards global consistency and comparability in sustainability reporting," the IIGCC stated in its submission. The group also backed the ISSB's proposal to make the SASB standards a foundational component of its new global baseline of sustainability disclosures.

Investor feedback submitted to the ISSB consultation also underscored the importance of robust human capital and methane emissions reporting – two areas seen as critical to assessing companies' environmental, social and governance (ESG) performance. Leading asset managers urged the ISSB to mandate disclosures on workforce diversity, skills, and safety metrics.

The IIGCC's push to weave SASB into the EU's new sustainability rules comes as policymakers on both sides of the Atlantic race to establish comprehensive corporate ESG reporting regimes. In the US, the Securities and Exchange Commission has proposed its own climate disclosure requirements, while the EU is finalizing the ESRS as part of its landmark Corporate Sustainability Reporting Directive.

Harmonizing global sustainability reporting standards has emerged as a key priority for investors seeking to compare companies' environmental and social impacts. The IIGCC's recommendation signals that aligning the EU and ISSB frameworks could be crucial to realizing that goal.