Standard setting for sustainability reporting

We analyse the structure and processes underlying sustainability reporting standard-setting, including the formation and governance of the International Sustainability Standards Board (ISSB), created as a parallel board to the International Accounting Standards Board (IASB) under the IFRS Foundation. We examine the rationale for establishing a separate sustainability standard setter, assess whether the arrangement meets a cost-benefit threshold, and explore how the ISSB's objectives compare with financial reporting objectives specified in the IASB's Conceptual Framework. Drawing on the history of financial reporting standard-setting, we identify key principles for success, including clear objectives, conceptual integrity, and adherence to due process. We evaluate how these principles apply to the ISSB's work and its reliance on existing frameworks. The paper considers qualitative characteristics such as comparability and materiality and explores three concepts introduced by the ISSB: dynamic materiality, interoperability, and connectivity. We organise our analysis around the history of standard-setting, the objectives of sustainability reporting and the problems it aims to address, the scope of standard-setting, the relationship between sustainability concepts and financial reporting concepts, and governance and oversight. By comparing financial reporting frameworks with sustainability reporting frameworks, we provide insights into how standard-setting structures can support credible, consistent, and decision-useful sustainability disclosures.