Insurance Europe has published its response to a consultation by the International Financial Reporting Standards (IFRS) Foundation on an exposure draft that outlines proposed amendments to the foundation’s constitution to accommodate an International Sustainability Standards Board (ISSB).
Insurance Europe said it supports initiatives in Europe aimed at embedding environmental, social and governance (ESG) criteria into all aspects of business and individual behaviour. Insurers also recognise the need for international action and solutions to what are global issues. In light of this, Insurance Europe generally agrees with the proposals made by the IFRS trustees in their proposed targeted amendments:
- Insurers support having a board structure for the ISSB inspired by what currently exists at the IASB for financial reporting.
- Insurers support the ISSB objective of promoting the convergence of national and regional sustainability reporting standards and IFRS sustainability reporting standards.
- Insurers welcome the fact that the IFRS Foundation intends to collaborate with regional initiatives – this is key.
Insurance Europe also had the following comments:
- The ISSB’s work should also cover the impact of the company on its environment, as well as the impact of ESG factors on the company value (ie double materiality).
- Sustainability standards should include forward-looking, transition information and include qualitative elements.
- The IFRS work should set its scope to encompass all aspects of sustainability, not only climate.
- Particular attention should be given to companies’ strain on reporting. In particular, the cost of producing data and the sensitivity of certain information that could affect the competitiveness of companies must be carefully considered throughout the process in a proper manner.
- While insurers support the flexibility given to the ISSB in the constitution on field testing, performing field tests should be considered as a norm rather than an exception if considerable concerns exist or emerge relating to particular standards.
- Board members of the ISSB should not be chosen using only geographical criteria. To ensure that the future standards will fit the needs of all jurisdictions and be applied by all countries across the world, the composition of the Board should also reflect the variety of profiles involved in sustainability reporting processes including investors, preparers and civil society.