Welcome as they are, profits and growth are not the only issues driving investor concern. People increasingly realize that true success demands vision and accountability. This is having a real impact in the financial world, where a whole niche market of ESG investing has sprung up. ESG stands for Environmental, Social and Governance investing—in other words, what are you doing to protect the environment, provide social leadership, and be wise stewards of your business? There are funds that invest only in companies that meet ESG criteria.
The trouble has been distinguishing true performers from those paying only lip service. Each company has been free to portray its performance in the best possible light. There’s even a word for it: greenwashing. We say a company is greenwashing when it makes false or misleading statements about the environmental benefits of its products or practices.
Thus was born the International Sustainability Standards Board in 2021, a public-interest organization that seeks to develop a global baseline for sustainability disclosures.
We’ve been following this issue very closely at TRSB as we’ve been translating sustainability reports for financial and regulatory clients for years. The new IFRS S1 is the first global standard to set down general financial reporting obligations on sustainability and major short-, medium-, and long-term risks. IFRS S2 is a second reporting standard specifically on climate change risk. Both are new for 2024.