GSG Impact’s latest report emphasises the importance of placing key voices from emerging markets at the centre of discussions on global sustainability standards.
The Global South may be home to 85% of the world’s population and over half of the world’s biodiversity, but smaller businesses in emerging economies seldom have a voice when it comes to setting global sustainability standards.
With the next round of standards likely to focus on social aspects, such voices must be at the centre of talks, according to a report in impact transparency published by GSG Impact, formerly known as the Global Steering Group for Impact Investment.
The risk of not listening to the voices of stakeholders from emerging economies when it comes to global sustainability disclosure is “significant”, Sebastian Welisiejko, chief policy officer at GSG Impact, told Impact Investor.
Sustainability disclosure and wider impact transparency efforts “have major momentum”, Welisiejko said. Considering the fact that the IFRS accounting standards are now mandatory in 147 countries, the IFRS Foundation’s International Sustainability Standards Board (ISSB) sustainability disclosure standards “could have a similar adoption rate”, Welisiejko said.
But inadequate engagement with key voices and stakeholders from emerging markets in the design of such standards “carries the very real risk of requirements not being fit for purpose in some of the most populous and vulnerable countries and regions”, he said.
Stakeholders
For three months, GSG Impact engaged with over 500 stakeholders, in person, in countries across Africa, Latin America and South-East Asia. Those surveyed included representatives from listed and non-listed companies, to financial regulators, stock exchanges, national accounting standard setters and government agencies.
One of the main recommendations of the report is that international standard setters should move from “open consultations” to “proactively engaging” with stakeholders from the Global South. GSG Impact also called on development agencies to pay for capacity-building initiatives in emerging economies, such as technical assistance programmes.
Large companies and institutions such as think tanks and academia should work together to build “a compelling business case for sustainability disclosure, beyond regulatory compliance”, according to the report. And finally, governments and multilateral organisations “should actively develop tools that factor in local and regional specificities while preserving global comparability”.
G20 meeting in Rio
The survey was supported by the UK Foreign and Commonwealth Development Office, in partnership with the IFRS Foundation’s International Sustainability Standards Board (ISSB), the United Nations Development Programme (UNDP), and the International Foundation for Valuing Impacts (IFVI) as well as more than 30 partner organisations.
The findings and recommendations of the report will be discussed at the G20 meeting in November in Rio de Janeiro.
“We’re a knowledge partner of the G20 Sustainable Finance Working Group, and in that capacity the analysis and recommendations in the report are expected to inform that group’s final communique”, Welisiejko said.
“Just as importantly, we expect to inspire concrete action from G20 governments, through their regulators and development finance institutions, on shaping, mandating and implementing sustainability disclosure, as well as supporting capacity building efforts across key stakeholder groups,” he added.
