By Ira Srivastava
1. Majority of the world’s economy adopts ISSB Sustainability Standards. Since the ISSB released inaugural sustainability disclosures in June 2023, jurisdictions around the world have been quick to adopt them. Now, almost a year later, “Jurisdictions representing over half the global economy by gross domestic product (GDP) have announced steps to use ISSB Standards or to fully align their sustainability disclosure standards with those of the ISSB”. These jurisdictions make up almost 55% of the world’s GDP and over 50% of the world’s CO2 emissions. The European Union was the first jurisdiction to include ISSB Standards into their European Sustainability Reporting Standards. Most recently, China released a draft incorporating the ISSB Standards into their China Sustainability Disclosure Standards. However, the United States has not formally adopted the ISSB Standards or incorporated them into any standing disclosure rules.
2. The GRI and IFRS announce collaboration to increase compatibility. The Global Reporting Initiative (GRI) and IFRS Foundation have announced that they will work more closely to optimize combined use of the GRI and ISSB Standards. This working relationship between the two standard setting organizations began in 2022 when they signed the Memorandum of Understanding. These organizations will work together to find disclosures they both have in common to streamline the reporting processes. This collaboration will help to build the ISSB’s upcoming Biodiversity, Ecosystems and Ecosystems Services project as the GRI has already published biodiversity standards. The ISSB’s primary focus will remain investors seeking sustainability information while the GRI will cover the needs of a variety of stakeholders.
3. California lawmakers propose new AI regulations. As artificial intelligence becomes more and more prevalent in our daily lives, ethical concerns are a growing issue. AI has been shown to have significant biases, and fake AI generated images have caused controversy. California’s Governor has stated that he wants the state to be a trailblazer and early adopter of AI legislation with other jurisdictions around the country expected to follow. In an attempt to address this, lawmakers in California have proposed landmark AI legislation that would “fight algorithmic discrimination and outlaw deepfakes that involve elections or pornography”. One of these measures would increase transparency on AI algorithms involved in the hiring process to avoid discrimination. Another would allow performers to exit contracts “if vague language might allow studios to freely use AI to digitally clone their voices and likeness”, a critical issue during the SAG-AFTRA and WGA strikes in Hollywood last year.
4. EU tightens rules on fund names to reduce greenwashing. The European Securities and Markets Authority (ESMA) released rules that limit the use of ‘ESG’ or ‘Sustainability’ in investment fund names. As demand for green funds has increased, four times as many funds use ESG terms in their names now compared to 2014, significantly increasing the risk of greenwashing. Under the new rules, 80% of investments made by a fund must be ESG-related in order to have those terms in the fund name. Funds that are invested in companies that make some revenue from fossil fuels are not disqualified from having ESG terms in their name.
5. Microsoft and G42 announce a green data centre in Kenya. A collaboration between Microsoft and G42, a company focused on AI development, will bring a state of the art sustainable data centre to Kenya. This is the “largest single private-sector digital investment” in the country’s history, and is expected to bring significant economic opportunities to the region. Local partners will be engaged to address four goals: AI model development in Swahili, building an East Africa Innovation Lab and AI training, investments in internet connectivity, and a partnership with Kenya’s government to expand cloud computing to the region.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.