At the UN Climate Change Conference COP 26 in Glasgow, the IRS foundation announced the creation of the International Sustainability Standards Board (ISSB). While this announcement was not necessarily a surprise as there was considerable support of the move, this announcement is a clear indicator of the acceleration of the production of ESG standards.
For the risk management community, the effort underscores the importance of the core pillars as defined by the Task Force on Climate-related Financial Disclosures (TCFD) – governance, strategy, risk management and metrics and targets. This is also reflected in many of the conversations we are having with customers on ESG. We are seeing, in addition to having representatives from investor relations, corporate affairs, communications and the various sustainability leads, a growing, strong presence of risk functions in ESG strategies.
The biggest challenge for organizations is the tsunami of demands and queries from a variety of stakeholders – investors, in particular. However, with the consolidation of standards as indicated by the announcement, the path towards a combined reporting structure – with both financial and non-financial information – may help alleviate some of this pressure. Organizations need to take steps now to prepare for this convergence. For organizations gathering information manually through hundreds of spreadsheets, there is time to transition to systems that allow you to substantiate ESG reporting at the top level, proving your viability going forward.
Producing a report is only the first step. Operationalizing ESG data, exposing it to business operations to drive action, is the critical step to drive accountability, improve visibility, collaborate on issues, and build efficiencies in remediation efforts. In other words, an integrated risk management approach to establish that common language and taxonomy to effectively prioritize action. Archer – as a leader in integrated risk management capabilities – provides an onramp to not only address ESG efforts today, but also fold that effort into the broader risk management strategy for the future.
The announcement reiterates ESG efforts are a business issue – not just a regulatory issue. Of course, there are regulations organizations must comply with, but ESG, at its core, is about the imperative to demonstrate to all stakeholders, the viability of the business and they can perform and prosper going forward.
Watch Peader Duffy and Steve Schlarman discuss the announcement. Learn more about how Archer ESG enables you to measure, quantify, assess, and report ESG readiness across your organization and global supply.