- A multinational coalition of investors is urging the International Sustainability Standards Board, a group aiming to develop a set of global sustainability standards for companies, to prioritize human and workers’ rights as part of the board’s next agenda, according to an Aug. 29 letter.
- A spokesperson for the International Financial Reporting Standards Foundation, which oversees the global standard setter, told ESG Dive the organization will begin publicizing feedback from the over 400 comments it received on its proposal in Q4 and is aiming to finalize its work plan in early 2024.
- Human rights and human capital are two of four areas ISSB sought feedback on as it finalizes its two-year agenda, but the coalition believes the two issues should be considered together.
The coalition is lobbying the board as businesses around the world begin coalescing around the inaugural ISSB standards released in July. The letter was led by a nonprofit’s initiative to improve workforce reporting and co-signed by 26 other organizations, across six countries including the U.S., including 24 that collectively manage more than $1 trillion in assets.
The coalition said it is “imperative” the ISSB focuses on human capital and human rights in its next agenda. ShareAction, the United Kingdom-based nonprofit leading the coalition, said the slow recovery of the labor market following the COVID-19 pandemic shows that human capital and human rights issues are already affecting companies’ bottom lines.
The letter also recommended ISSB look at the issues of human capital and human rights together, rather than separately as they appear in ISSB’s request for information. The group argues that siloing the two topics is divorced from the reality of how businesses handle them.
“In practice, neither companies nor investors treat human capital and human rights as two distinct, separate areas,” ShareAction’s letter says. “Human rights due diligence processes, for example, are used as key tools for identifying labour issues.”
The group points out that the issues have multiple intersections like diversity, inclusion and unionization, which all could be considered both human capital and human rights issues. By separating the concepts, the group argues, ISSB would create overlapping disclosures at a time when investors are looking for more clarity on social disclosures.
The nonprofit’s Workforce Disclosure Initiative, which looks to improve transparency and data for workforce issues, is the lead signatory on the letter. It is partially funded by the British government and includes 60 companies who manage $10 trillion in assets. James Coldwell, who leads the program, said ISSB has an opportunity to give investors a global reporting baseline on human and workers’ rights.
“We know that workers around the world face exploitation by unscrupulous companies, harming the workers themselves and creating risks for investors,” Coldwell said in a release. “Tackling these issues can only be achieved when there is transparency around corporate practices - something the ISSB is perfectly positioned to deliver.”
Allianz, the Germany-based life insurance company, also called for the board to make human rights its “highest priority,” and said “the interlinkage with the topic of human capital is key.”
“Not only is there an urgent need for action, also, many concepts and frameworks can likely be leveraged, allowing for synergies,” Allianz said. “Finally, with the link between due diligence and the materiality assessment, but also more and more due diligence (process) requirements emerging, a global reporting framework connecting the dots would be particularly valuable.”
The Securities and Exchange Commission has its own plan to propose a rule to require companies to report on the makeup of its workforce, and is in the process of finalizing a climate risk disclosure rule that has drawn the ire of House Republicans. In August, a group of House Democrats called on SEC Chair Gary Gensler to promptly finalize the rule.
In crafting the climate rule, Gensler said the agency would consult with ISSB and other standard setters, but maintained his agency would ultimately make its own path. The SEC’s workforce proposal would be narrowly focused on company demographics, rather than the more broad human rights reporting the ISSB is looking to tackle.