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Expectations from International Sustainability Standards Board (ISSB) in making insurers ESG aligned.

Jul 19, 2022

https://illuminem.com/energyvoices/fb5b5870-56e8-413b-9cc6-761960b33529

My commentary on the presentation at the CHINA INTERNATIONAL CONFERENCE ON INSURANCE AND RISK MANAGEMENT (CICIRM) 2022, Changsha – published by illuminem.

The International Financial Reporting Standards (#IFRS) has had a serious blind-spot in terms of #sustainability. Is the formation and incorporation of the International Sustainability Standards Board (#ISSB) a panacea? I pick a few signals.

Is ISSB adoption by IFRS Foundation the magic wand that would drive businesses (including insurers) towards sustainability? Robert Eccles gives a green signal. Yet he cautions: “As part of its “Green Deal,” the #europeanunion is in the process of developing a set of standards for sustainability reporting… Concerns have been raised about the speed and process by which these sustainability reporting standards are being developed”. Bureaucracy continues to plague #multilateral agencies.

How do you embed #ESG to make insurers sustainable? In the course of my exploration Tamara Close, CFA explains how ESG compliance need not always mean sustainable. Nor being sustainable translate as ESG compliant.

Dr. Shiva Rajgopal believes climate reporting is the third best option for climate change. He is bullish about the role of ISSB. Prof. Carol Adams looks at the nitty gritty and highlights what else ought to be done. Bill Baue believes the Intergovernmental Panel on Climate Change (IPCC) has given the #colonial component a miss and the #GlobalSouth deserves a longer runway! So, how should the sustainability architecture account for it?

While several disconnects remain – for instance how must the bean-counters think? A fresh debate might be in the offing: is the climate crisis just about #decarbonisation? Likewise, how to account for #biodiversity and #nature? Watch-out how the nature related financial disclosures (#TNFD) begin to assert.

“Achieving Net Zero for carbon does almost nothing, yet this is the focus of most climate change work… The good news is that we can bring back nature, make the planet beautiful and fix climate change, all at the same time”, Dr.Howard Dryden shares the pros and cons.

“The world is on the attack against #ESG when it should be dealing with risks and addressing #ClimateChange”, warns Matthew Sekol. He highlights: “how ESG gets squeezed by the far-right… to the point where it is framed for #srilanka‘s collapse”.

Alison Taylor and Brian Harward reveal: “Pressure on companies to commit to ESG has so far led mostly to box-ticking… Instead, they should recognise that the stakes are high, and commit to push companies to do what they are designed for: innovating and improving our lives”.

Insurers should be no exception. Despite all the prevailing negativism – the occasional silver lining is reason enough for #insurers to act with due urgency.

Please respond to the IFRS Foundation (Link in the article). Deadline: July 29th, 2022.

Chartered Insurance Institute
清华大学经济管理学院 Tsinghua University School of Economics and Management

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