[ESMA32-992851010-1018 ] Letter to International Sustainability Standards Board (ISSB) on the consultation on Agenda Priorities

ESMA has responded to the ISSB’s consultation on its Agenda Priorities. ESMA congratulated the ISSB on finalizing IFRS S1 and S2, significant achievements in sustainability reporting standards. ESMA provided feedback on potential priorities for the ISSB’s upcoming two-year work plan.
ESMA’s mandate involves corporate sustainability reporting and contributing to the development of ESRS. They closely monitor the EFRAG’s work and engage with the ISSB, aiming for global consistency in sustainability reporting standards.
ESMA emphasized that implementation support for the recently finalized IFRS S1 and S2 is crucial, particularly in understanding the role of sustainability impacts in financial materiality assessment. They also recommended conducting research to develop new standards, meeting investors‘ growing demand for information beyond climate issues.
ESMA highlighted the importance of addressing partial or selective disclosure of material ESG topics to combat greenwashing. They suggested prioritizing new research projects to cover remaining ESG topics, emphasizing biodiversity, ecosystems, and ecosystem services due to international momentum in this area. They also suggested beginning work on social and human rights-related reporting standards.
Interoperability between ISSB and ESRS was crucial for ESMA. They suggested considering the structure and approach of ESRS when defining and structuring ISSB projects, ensuring consistency for preparers and users.
ESMA’s response included detailed answers to specific questions, covering the prioritization of activities, criteria for assessing sustainability reporting matters, and feedback on proposed research projects related to biodiversity, human capital, human rights, and integration in reporting. They emphasized the need for integration in reporting but suggested postponing it to ensure resources for other projects.
ESMA encouraged cooperation between ISSB and IASB for the integration in reporting project and proposed drawing from the IASB’s Management Commentary and the Integrated Reporting Framework.