In the PRI’s response to the Consultation on Agenda Priorities, we call, among other recommendations, on the ISSB to prioritise a corporate disclosure standard for human rights and social issues, applicable across sectors, geographies and business models.

For institutional investors, there are obvious financial risks and opportunities relating to human rights and social issues...

Investors are also affected by systemic risks...

Furthermore, a sharp rise in corporate regulation – such as human rights due diligence and modern slavery laws – is increasing the materiality of social issues.

From the PRI’s independent research, it’s clear that investors seek information about corporate governance, strategy, risk management and progress using targets and metrics covering the full suite of risk and opportunities related to social issues[1]. Conveniently, the General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) standard and the international framework on human rights constitute a strong template for a corporate disclosure standard that matches those requirements.  

Here is how we propose it can be applied in our consultation response: 

• Governance: Investors may seek to understand how boards and senior management assess, respond to and monitor financial risk and opportunities related to social factors.
• Strategy: Investors may seek to understand how material social issues affect the company strategy and financial planning, including risk and opportunities arising from: 
  • Inherent social challenges related to an entity’s business model. 
  • Actual and potential business disruption arising from impacts on specific groups of people such as workers, communities, and customers / end-users. 
  • Macroeconomic risk emanating from social aspects (for example related to economic inequality) or transitions (such as the low carbon transition).
  • Regulatory and legal risk related to social matters (including ongoing legal cases). 
  • Value chain structures and dependencies. 
• Risk management: Investors may seek insights about a business entity’s identification of risk and opportunities related to social issues. This information may be based on an entity’s human rights due diligence procedures – which draws on stakeholder input – followed by an assessment of the impact on enterprise value arising from the social risks and impacts identified. 
• Targets and metrics: Investors may seek both qualitative and quantitative disclosures on key risks and opportunities which are of high quality and relevant for investors’ decision-making and reporting. Given that workforce metrics (including human capital management) are more advanced[2] they may be prioritised by the ISSB for standardisation as part of a corporate disclosure standard for human rights and social issues. ...

We therefore call on the ISSB to prioritise the development of a corporate disclosure standard for human rights and social issues, to enable both corporate and investment organisations globally to fulfil their roles accordingly.