NYSE, B3, And TMX: Why Investors Are Embracing the ISSB Sustainable Finance Framework

Comparability and interoperability in sustainable finance reporting standards topped the discussion in a recent roundtable with executives from stock exchanges around the world.

"I think what you're starting to see from investors is a lot of consolidation around that ISSB framework," said Brian Matt, Head of ESG Advisory at the New York Stock Exchange. In May 2024, 120 investors, companies, industry associations and stock exchanges signed a call for commitment from relevant authorities across jurisdictions to adopt the ISSB (International Sustainability Standards Board) standards. IOSCO, the leading international policy forum for securities regulators and the global standard setter for financial markets, has also endorsed these standards. IOSCO members regulate more than 95% of the world's securities markets in 130 jurisdictions.

Exchanges focus on the information a company needs to provide to investors so that the investors can manage their portfolios effectively. This information includes ESG and climate risk data. However, regulators in different localities are developing their own versions of the ISSB standards. When the goal is to enhance interoperability in capital markets, these individual approaches can reduce comparability. Consistency is essential for attracting more capital from asset owners.

Victoria Powell, senior manager – ESG, regulatory affairs, for the World Federation of Exchanges, said: "ISSB and GRI and other standard setters are really working quite hard on making sure that they're compatible. …. It's critical because preparing the reports and being able to compare them backwards and forwards takes a lot of work."

Currently, the ISSB is beginning to set standards about risks and opportunities related to biodiversity, ecosystems and ecosystem services, and human capital. U.S. regulators remain cautious and have yet to formally adopt ISSB standards. Although the SEC's recent climate disclosure rules align with international frameworks like the TCFD that are part of the ISSB standards, the SEC has not recognized the ISSB as an alternative to its own requirements.

Meanwhile, U.S. companies are in dialogue with the ISSB about using its standards for international disclosures.

This conversation is a follow up with members of the World Federation of Exchanges after a one-day deep dive June 5 in Toronto where experts in the field of sustainable finance shared their insights and offered solutions to the challenge of achieving net zero. I attended the information-packed day, some of which this conversation explores.

Participating in this WFE Roundtable are Nicole Rosenberg, vice president of governance and sustainability at TMX Group; Cesar Sanches, head of sustainability at B3, the Brazilian Stock Exchange; Brian Matt, head of ESG advisory at the New York Stock Exchange (NYSE); and Victoria Powell; senior manager of ESG regulatory affairs at the World Federation of Exchanges (WFE).

00:00 Introduction - transition finance to net zero
00:51 Victoria Powell Introduces the Toronto ESG conference
01:26 Exchanges working with new issuers of stocks
02:34 Transition plans and finance
03:07 Plans are forward looking
03:58 Transition focused taxonomies
04:42 Introduction: Nicole Rosenberg, TMX
06:22 Rosenberg: Difference between US and Canadian issuers
06:56 Rosenberg: Standards from Canadian Standards Board
07:16 Rosenberg: Importance of climate data to issuer pricing
07:56 Brian Matt of NYSE ESG Advisory
08:31 Matt: Investors consolidating around ISSB framework
09:50 Matt: Investors, asset managers, seek interoperability
10:21 Powell: Standard setters and comparability
11:06 Matt: split between single materiality and double materiality
12:03 Matt: more companies measuring out of scope 3
12:58 Matt: ISSB built for investor as stakeholder
13:17 Matt: GR Built for a range of stakeholders
13:37 Cesar Sanches - head of sustainability B3
15:06 Sanches: Brazil's new legislation
15:56 Sanches: opportunities, risk and scenario analysis
17:33 Powell: building issuer skills to meet investors
18:27 Rosenberg: issuers domestic and abroad
19:38 Rosenberg: How Canada is different
22:10 Matt: international leaders in venture
22:28 Matt: role of public equity exchanges
24:25 Matt: sponsor-backed companies
25:27 Matt: different levels of requirements in US
25:41 Matt: NYSE ISSB training with Sustainable Stock Exchanges
27:12 Powell: strategic tools
27:51 Matt: Roles of procurement organization disrupted
28:48 Rosenberg: Canadian anti-modern slavery rules affect on procurement
29:37 Sanches: supply chain rules
31:00 Sanches: evaluation process for emerging markets
32:31 Matt: nonfinancial data is looking more like financial data
33:28 Rosenberg summary: ensuring companies have the capital to transition
34:22 Sanches summary: WFE green equity principles
35:32 Powell summary: complexity of nature and biodiversity