Sue Lloyd talks to Nigel Sleigh-Johnson and Eddy James about the International Sustainability Standards Board and the importance of global standards on sustainability reporting.
Sue Lloyd was appointed Vice-Chair of the International Sustainability Standards Board (ISSB) early this year and took up her new post on 1 March 2022. She brings a wealth of standard-setting experience to her role, having been a member of the International Accounting Standards Board (IASB) since 2014 and its Vice-Chair since 2016.
We met with her at the IFRS Foundation’s London offices to discuss the challenges that lie ahead as the newly formed ISSB, which was launched at last year’s COP26 Climate Change Conference in Glasgow, seeks to answer the growing call for high-quality and comparable disclosures on climate-related and other sustainability matters.
We started by asking Lloyd what had drawn her to this new role. “I’m excited to take on this new challenge as it creates an opportunity to use my experience to assist in delivering the sustainability standards that global markets need,” she says. “I see this as a chance to use my standard-setting skills in a new and exciting context.”
She explains why the ISSB has such a key role to play in the years ahead: “Corporate reporting is changing, with investors and other capital market participants asking for more information about companies’ sustainability-related risks and opportunities to help them assess enterprise value and make informed investment decisions. But if that information is to be really useful, it needs to be prepared with the same rigour as information in the financial statements. Our aim is to produce a comprehensive and high-quality suite of sustainability disclosure standards that can be used by market participants around the world.”
There is no doubt that this is a hugely ambitious project. But Lloyd believes that the ISSB is well placed to achieve its goals. “Sustainability is a subject that everyone is interested in right now, meaning there’s real momentum behind this project,” she says. “We’ve received support from public authorities and market participants around the world, including, importantly, the G20, the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board. Having their support provides a real catalyst for jurisdictional adoption.”
Importantly, the ISSB has no power to require anyone to adopt its standards, so getting buy-in from jurisdictions is really important to the success of the project. But the EU and the US, among others, have already started their own sustainability and climate-related initiatives. So, are we really heading towards a global solution or is there a danger of continuing with fragmented and conflicting requirements in different countries?
Lloyd believes it is the former: “There are some issues around timing, as some jurisdictions started work on their sustainability projects before we did. But we are working closely with them to ensure that our approaches are as aligned as possible. To this end, a new jurisdictional working group has been created to capitalise on the opportunity of having several sustainability proposals out for comment at the same time. This group is to facilitate dialogue with bodies representing jurisdictions such as the EU, the US, the UK, China and Japan in order to find opportunities to bring the proposals together. We are also creating a permanent advisory body – the Sustainability Standards Advisory Forum – to enable regular and ongoing dialogue with a broad set of jurisdictions. Working together through these forums, I believe we can develop compatible solutions that form a global baseline that individual jurisdictions can build on according to their needs.”
We started by asking Lloyd what had drawn her to this new role. “I’m excited to take on this new challenge as it creates an opportunity to use my experience to assist in delivering the sustainability standards that global markets need,” she says. “I see this as a chance to use my standard-setting skills in a new and exciting context.”
She explains why the ISSB has such a key role to play in the years ahead: “Corporate reporting is changing, with investors and other capital market participants asking for more information about companies’ sustainability-related risks and opportunities to help them assess enterprise value and make informed investment decisions. But if that information is to be really useful, it needs to be prepared with the same rigour as information in the financial statements. Our aim is to produce a comprehensive and high-quality suite of sustainability disclosure standards that can be used by market participants around the world.”
There is no doubt that this is a hugely ambitious project. But Lloyd believes that the ISSB is well placed to achieve its goals. “Sustainability is a subject that everyone is interested in right now, meaning there’s real momentum behind this project,” she says. “We’ve received support from public authorities and market participants around the world, including, importantly, the G20, the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board. Having their support provides a real catalyst for jurisdictional adoption.”
Importantly, the ISSB has no power to require anyone to adopt its standards, so getting buy-in from jurisdictions is really important to the success of the project. But the EU and the US, among others, have already started their own sustainability and climate-related initiatives. So, are we really heading towards a global solution or is there a danger of continuing with fragmented and conflicting requirements in different countries?
Lloyd believes it is the former: “There are some issues around timing, as some jurisdictions started work on their sustainability projects before we did. But we are working closely with them to ensure that our approaches are as aligned as possible. To this end, a new jurisdictional working group has been created to capitalise on the opportunity of having several sustainability proposals out for comment at the same time. This group is to facilitate dialogue with bodies representing jurisdictions such as the EU, the US, the UK, China and Japan in order to find opportunities to bring the proposals together. We are also creating a permanent advisory body – the Sustainability Standards Advisory Forum – to enable regular and ongoing dialogue with a broad set of jurisdictions. Working together through these forums, I believe we can develop compatible solutions that form a global baseline that individual jurisdictions can build on according to their needs.”