Five years ago, the International Sustainability Standards Board (ISSB) was still an idea, brought to life when the IFRS Foundation announced its creation at the UN Climate Conference (COP26) in Glasgow on 3 November 2021. The need was clear: investors around the world wanted to better understand what they were investing in, and companies needed a common language to explain how sustainability-related risks and opportunities could affect their prospects. But there was no Board, no dedicated staff, and, of course, no Standards.

Five years on, 50 jurisdictions are on the path to adopting or otherwise using the ISSB Standards. Yet looking back, what strikes me is how profoundly collective this undertaking has been.

People make change happen

I think of the inaugural Board members who left established careers on several continents to build something that did not yet exist; the standard-setting teams who brought decades of painstaking work with them; regulators and policymakers who have helped embed this work in their jurisdictions, navigating complex and fast-changing geopolitical environments; and the companies, investors and many others who have challenged our thinking and helped make the Standards work in the real world. I also think of the young people who keep reminding us what they expect of the future we are shaping. 

Perhaps the most important lesson I take from these first five years is that institutions and standards can create the conditions for change, but ultimately people bring them to life and make that change happen. 

Creating value

The idea was simple: financial statements remain essential, but they cannot tell us everything that matters to investment decisions. Climate, nature, workforces, supply chains and access to resources are not abstract sustainability concepts. They shape whether a business remains resilient, competitive and capable of creating value.

This is captured in the second paragraph of IFRS S1, our general Standard: the value a company creates for itself and its investors is inextricably linked to the value it creates, preserves or erodes for others. I have long believed this. Today, it is becoming part of the language of global accounting. 

We are living through profound changes in the physical, social, technological and geopolitical environment in which companies operate. The businesses best placed to navigate them will be those that can explain not only what makes them successful today, but what will allow them to continue creating value as the world around them changes. 

Urgent shifts require leadership 

Eleven years ago, Mark Carney, then Governor of the Bank of England, warned of the “tragedy of horizons”. The tragedy now is that, over the past decade, horizons have collapsed: what was long-term 10 years ago is happening now. The climate has already changed. Nature loss is accelerating. A disruption at the far end of a supply chain, on the other side of the world, can impact a company’s financial statements immediately. Geopolitics only amplifies this pattern. 

This is where the ISSB comes in. Its global, comparable, accounting-grade language allows markets to appropriately price companies’ exposure and resilience to these risks and opportunities. Yet much of our corporate and investment governance, from executive incentives to internal processes and management language, was not built to grasp this collapse of time and space, let alone address it through collective action. Too often, CSOs and CFOs still compete over budgets instead of working as allies; the same goes for C-Suite executives and Boards of Directors. 

This is why this shift demands leadership, both individual and collective: people making decisions together, not just institutions and standards. The effect will be systemic. Shift just 1% of the combined value of global capital markets and bank balance sheets each year, using a risk-return equation informed by the ISSB Standards, toward more resilient, future-proofed business models, and USD 3 trillion could flow annually towards a more resilient global economy. 

Choosing to invest collectively

What impresses me is that jurisdictions committed to adopting the ISSB Standards already represent nearly half of global market capitalization, with 18 jurisdictions currently implementing. The ISSB Standards can become a truly global, comprehensive and inclusive baseline. And in doing so, serve as a public good: fundamental market infrastructure that helps jurisdictions understand how forces such as climate and geopolitics affect their competitive advantage, and ultimately how to future-proof their economies.

Here too, leadership is decisive. Government leaders, capital market regulators, central bank governors and prudential supervisors will need to look past immediate and competing priorities and keep choosing to invest, together, in this infrastructure. 

And the time is now.

Emmanuel is the Chair of the International Sustainability Standards Board (ISSB) and a B Team Leader. Learn more about Emmanuel.

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