The Chairman of the International Sustainability Reporting Standards Board (ISSB), Emmanuel Faber, stressed the importance of the capital market for corporate non-financial reporting during an exchange of views with the European Parliament’s Committee on Economic and Monetary Affairs (ECON) on Wednesday 31 August.
“Capital markets today are the most global interconnected ally and enabler of these jurisdictional policies in matters of sustainability development and climate”, he said.
In his view, “Capital markets are by essence the natural fundamental way of funding the transition that businesses will need to go through for more resilient economic social environmental models”, provided that these markets are “well guided and well informed”.
He also emphasised the leading role of the European Union, which has decided to define its own reporting standards through the CSRD directive (see EUROPE 12983/34). “The EU has the most advanced and comprehensive set of proposals; we need this leadership from the EU”, he said.
While jurisdictions are making progress, particularly on climate, MEPs have expressed concerns about the compatibility of international and European standards (see EUROPE 12989/1).
Mr Faber noted that there is a weekly bilateral dialogue process with the EU, including with the European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) as well as with the European Financial Reporting Advisory Group (EFRAG).
The climate issue, in particular, will help align the European and international visions. “On the climate, I think we are very close in substance”, Faber said.
He confirmed that the double materiality sought by the EU will not conflict with international standards, thanks to the high degree of intersection between the two standards.
MEP Paul Tang (S&D, Dutch) raised the issue of the lack of interest in sustainability reporting by some large US companies, notably in Florida and Texas. Mr Faber confirmed the lack of interest from large US companies, but said he was surprised by the rather high ambitions of the US. Securities and Exchange Commission (US SEC), the US federal agency that regulates and supervises the financial markets.
EFRAG has until November to make its proposals for standards to the European Commission. The Commission aims to have the first extra-financial reporting start in 2024. (Original version in French by Anne Damiani)