The International Sustainability Standards Board (ISSB) recently issued a Request for Information Consultation on Agenda Priorities, to seek feedback on its priorities for its next two-year work plan. The document is open for comment until September 1, 2023.

The ISSB has identified four potential projects in particular: “three sustainability-related research projects—1) biodiversity, ecosystems and ecosystem services; 2) human capital; 3) human rights—and a fourth project researching integration in reporting.” These are all of some interest, but I’ll focus here on the human rights item, as it would perhaps constitute the greatest expansion to the scope of corporate reporting as we usually think of it. Here’s how the document describes the topic:

• According to the United Nations, human rights are the basic rights and freedoms that belong to every person by virtue of being a human being. These universal rights range from the most fundamental—for example, the right to life—to those that make life worth living, such as the rights to food, education, work, health and liberty.
• A range of human rights issues are likely to contribute to entities’ sustainability-related risks and opportunities and inform investment decisions. For example, if an entity or a company in its value chain violates workers’ rights (for example, by failing to pay a living wage, employing children, using forced or bonded labour, or restricting workers’ freedom of association) the entity’s value and reputation can be damaged; it could be fined; and its license to operate could be undermined. These risks can also be prompted by indigenous peoples’ rights and community rights—such as access to water, or land rights—as well as people impacted by end use (for example, data privacy and product health and safety). Some of these issues overlap with human- or nature-related topics and issues, such as human capital (for example, labour wages and equality), water (for example, access to safe drinking water), climate change (for example, just transition), or pollution (for example, hazardous substances or toxic waste).

On why this topic is a priority:

• … entities are increasingly challenged to manage these risks as international economies become more interconnected and supply chains become more complex. This situation creates increasing risks for entities that do not have appropriate due diligence processes and practices in place. Entities that contribute to—or are perceived to contribute to—human rights violations, through action or inaction may be subject to protests, consumer or group boycotts, or suspension of permits or of access to goods. They may also face substantial costs related to compensation, settlement payments or fines and write-downs in the value of their assets in sensitive areas. The effects of human rights-related risks on financial position and performance are materialising in the form of, for example, significant reductions in share price in response to investigations on harsh working conditions. Furthermore, human rights due diligence legislation (for example, the European Commission’s Directive on Corporate Sustainability Due Diligence, France’s Corporate Duty of Vigilance Law, the UK’s Modern Slavery Act, and the German Supply Chain Due Diligence Act) is becoming more stringent.
• In such a context, a growing number of investors view human rights information as relevant to their assessments and related decision making. For example, The UN Guiding Principles Reporting Framework is backed by a coalition of 88 investors representing US$5.3 trillion in assets under management. The Investor Alliance for Human Rights—representing more than 200 organizations with more than US$12 trillion in assets under management—has also called on entities to publicly disclose information in five areas, including how they prevent, mitigate and remediate adverse human rights impacts in their value chains.

The document says that the ISSB’s research and outreach found evidence of investor interest in information on both human capital and human rights: “the topics are seen as separate but are characterized by issues that may have various channels through which an entity creates, preserves or erodes value…Despite clear investor interest and recent work to address the topic, the market’s understanding of human rights and its link to investor-relevant sustainability-related risks and opportunities is still maturing. The ISSB’s research and outreach work identified a strong investor interest in human rights focused on workers’ rights in an entity’s value chain (for example, health and safety, fair wages, forced labour and child labour). Research also showed that investors are interested in understanding communities’ rights in an entity’s value chain (for example, rights of indigenous peoples, land and water impacts, and health impacts). The project would be intended to more clearly understand and define the link between these topics and investor-relevant sustainability-related risks and opportunities and associated information.”

It seems to me that this project would face some headwinds: for example, things being what they are, there’s hardly a corporation that doesn’t fail to pay some of its employees a living wage. Although, say, the undesirability of child labour may be something on which we can all generally agree, some other aspects of human rights are heavily ideologically loaded (does “health and safety” include a woman’s self-determination regarding reproductive health? Not in much of the US it seems…) Any disclosures in this area would seem to carry a massive capacity for greenwashing (or whatever the human rights version of that should be called). But as we noted before, it’s fascinating that the ISSB is even grappling with these concepts (given that they’re rooted to some degree in rejecting the free-flowing capitalism that the IFRS Foundation has historically existed to facilitate). So let’s wait and see…

The opinions expressed are solely those of the author.