Among the many commenters on the ISSB’s recent consultation on agenda priorities was the World Nuclear Association.

Here’s some of what they had to say:

• We believe that ISSB should adopt the ‘principle of technological neutrality’, with a focus on developing performance-based criteria that provide an accurate and comparable account of climate-related and sustainability related risks and opportunities. The ISSB should avoid emphasizing specific technologies as solutions within their standards as this arguably fails to provide comprehensive high-quality, transparent and comparable data that meets the information needs of global investors. It further has the potential to distort markets in a way that does not necessarily help the attainment of climate and sustainability objectives.
• This technology neutrality approach is already well-embedded in TCFD framework and the non-industry specific parts of S1 and S2, however from our review we note that the industry-specific standards (SASB and industry-based guidance to S2) sometimes take a prescriptive approach, where certain technology-specific solutions are emphasized.
• Reducing material climate risks means that companies invariably need to make progress in switching to low-carbon energy sources. Whether they choose to do this through the use of renewables, nuclear, carbon capture, efficiency, or some other means should be equally weighted by the ISSB climate standard. These technologies are a means to an end, not the end themselves! However, a close look at the published industry standards accompanying S2 (made readily searchable in digital format) reveals a significant renewables bias, whereas other decarbonization options are significantly downplayed.
• We provided some specific instances of this prescriptive approach within the industry standards in our comment letter (dated 28 July 2022) to the S1 and S2 consultation. Disappointingly, this remains present in the published industry-based guidance accompanying S2. The S2 industry-based guidance mentions the word ‘renewable’ or ‘renewables’ 879 times across the various sectors and subsectors. By contrast, nuclear energy was mentioned 28 times, and was wholly confined within volume 32 – electric utilities and power generators. I.e., nuclear was mentioned only in relation to its own industry disclosure requirements. We observe that the reporting of metric of ‘percentage of renewable energy’ is frequently required under the ‘Energy Management’ disclosure topic. No information is provided to justification for (sic) this particular metric, and it does not even necessarily impart information about the carbon-intensity of the energy option. We therefore suggest that it be replaced with ‘percentage of low-carbon’ instead.

I’m not qualified to comment on the specific issue raised, although it strikes me that the dramatic numerical disparity cited (879 versus 28) is a bit less meaningful than the comment letter suggests, given the recurring references to the six volumes of industry standards grouped under the heading “renewable resources & alternative energy sector”. But that aside, the letter struck me as an intriguing example of an objection based on what you might loosely term ideological differences – that is, on the premise that a disclosure requirement based on “renewability” fails to be sufficiently neutral, for reasons rooted in values, biases, etc. As I understand it, nuclear energy may indeed be as virtuous as renewable energy sources if judged only by effectiveness in eliminating carbon emissions, while having its own drawbacks (high capital costs, toxic waste) and advantages (small land footprint, relatively higher output). While a functioning society may reach a broad consensus on the criteria for adjudicating these pros and cons, it’s perhaps undesirable that a general purpose disclosure standard should implicitly do that by its very design. So the commenters may have a point.

The work of the ISSB will almost inevitably raise this kind of objection from time to time – I wrote before about some of the problems that might arise in tackling such issues as human rights (the subject matter of one of its proposed projects). The IASB sometimes wanders into vaguely similar territory too. For example, a comment letter on the ongoing IASB Request for Information: Post-implementation Review of IFRS 9 Financial Instruments Impairment reviewed the development of the standard and opined: “We think that both the final IASB and FASB standards compromised on the decision-usefulness of the resulting financial statements in favour of achieving an outcome that was deemed to be suitably conservative and would satisfy the banking regulators. This was perhaps understandable following the Global Financial Crisis, but we think, with the benefit of hindsight, this was not the best outcome for investors.” Again, without trying here to conclude on whether that analysis is correct, this seems to suggest the influence of ideological/political factors in shaping a standard, which may render the resulting output inherently less likely to pass the test of time.

The disclosures flowing from the two ISSB standards issued to date, once implemented, will no doubt provide further scope for related debate. For example, the requirement to discuss “trade-offs between sustainability-related risks and opportunities that the entity considered” will often be an invitation to a flood of self-serving nonsense, given that many entities (fossil fuel burners, heavy industrial manufacturers, etc.) are unsustainably resource-depleting by their very nature, with any “trade-offs” being the merest tweaks on a grim record. I make that prediction, of course, from a place of impeccable neutrality…

The opinions expressed are solely those of the author.