Giving institutional investors one place to turn when making investment decisions related to climate risk "will make it easier for investors, regardless where they are on that spectrum, to understand the risk," said Katie Schmitz Eulitt, director of investor relationships and head of Asia-Pacific outreach with the Value Reporting Foundation in San Francisco. "Without standardization, the data is all over the map. And this will help make data more robust over time," she said.
Ms. Eulitt credits institutional investors for pushing for ISSB's formation. "I really think it speaks to the strength of investors rallying around something they think is important," she said.
Anne Simpson, managing investment director for board governance and sustainability at the $489.9 billion California Public Employees' Retirement System, Sacramento, said the pension fund represented the Council of Institutional Investors at a 2016 IFRS advisory group meeting where it led the call for creating what is now ISSB.
"Investors dream of a common language in financial markets to integrate risk and return. The new ISSB will provide CalPERS as a global investor with corporate reporting which is standardized, relevant and fully integrated into the audited accounts," Ms. Simpson said in an email.
The new standards could also "help move the dial in tackling broader concerns of greenwashing by the industry," said Berenice Lasfargues, New York-based ESG analyst and sustainable development goals lead at BNP Paribas Asset Management, with €502 billion in assets under management. "ESG ratings are only as good as the information they are being fed, and for us to properly assess the sustainability characteristics of an investment, we need harmonized comparable disclosures," Ms. Lasfargues said.
A related effort announced Nov. 9 at COP26 is a task force developing a Global Resilience Index to enable asset owners to compare portfolio risks across geographies and scenarios, and allow countries to prioritize climate-related investments. The open-source risk management resource would cover man-made environment, infrastructure, agriculture and societal exposures. Among its backers are the Coalition for Climate Resilient Investment, whose members include the $312.2 billion California State Teachers' Retirement System, West Sacramento, the A$233 billion ($175 billion) AustralianSuper, Melbourne, and the £4 billion ($5.5 billion) Environment Agency Pension Fund, Bristol, England, as well as leading asset managers and consultants, including Aberdeen Standard Investments, CBRE Investment Management, DWS Group, Fidelity International, Impax Asset Management, Invesco Ltd., Legal and General Investment Management, Macquarie Group Ltd., Schroders PLC and Willis Towers Watson PLC.