Stakeholder participation in the ISSB’s standard-setting process: the consultations on the first exposure drafts on sustainability reporting

Abstract

Purpose This paper aims to provide empirical evidence on formal stakeholder participation (or “lobbying”) in the early phase of the International Sustainability Standards Board’s (ISSB’s) standard-setting. Design/methodology/approach Drawing on a rational-choice framework, this paper conducts a content analysis of comment letters (CLs) submitted to the ISSB in response to its first two exposure drafts (published in 2022) to investigate stakeholder participation across different groups and jurisdictional origins. The analyses examine participation in terms of frequency (measured using the number of participating stakeholders) and intensity (measured using the length of CLs). Findings Preparers and users of sustainability reports emerge as the largest participating stakeholder groups, while the accounting/sustainability profession participates with high average intensity. Surprisingly, preparers do not outweigh users in terms of participation frequency and intensity; and large preparers outweigh smaller ones in terms of participation intensity but not participation frequency. Internationally, stakeholders from countries with a private financial accounting standard-setting system participate more frequently and intensively than others. In addition, country-level economic wealth and sustainability performance are positively associated with more participating stakeholders. Practical implications This study is of interest for organizations and stakeholders involved in or affected by standard-setting in the field of sustainability reporting. The finding of limited participation by investors and from developing countries suggests the ISSB take actions to enhance the voice of those stakeholders. Social implications The imbalances in stakeholder participation that were found pose potential threats to an important aspect of the input legitimacy of the ISSB’s standard-setting process. Originality/value To the best of the authors’ knowledge, this paper is the first to explore stakeholder participation by means of CLs with the ISSB in terms of frequency and intensity.

The International Sustainability Standards Board’s (ISSB) past, present, and future: critical reflections and a research agenda

“…The ISSB has been labelled as representing the capture of the standard-setting process by powerful groups such as large accounting firms and asset managers (Adams and Mueller, 2022). Kulik and Dobler (2023) find that preparers and users of sustainability reports, along with the accounting profession, are the largest groups of participants in the ISSB consultation process, while, surprisingly, there was little participation of investors (as the ISSB claims to be developing standards that aims to meet investors' needs). The authors conclude that such an imbalance in stakeholder participation poses potential threats to the ISSB's legitimacy and its standard-setting process (Kulik and Dobler, 2023).…”

“…In establishing its global position as a sustainability standard setter, the ISSB will continue to legitimacy challenges. While emerging research provides empirical evidence of stakeholder participation in the ISSB's early consultation process (Adams and Mueller, 2022;Kulik and Dobler, 2023), the ISSB will keep attempting to get stakeholder consensus through further consultation processes and collaborations. Thus, future research may be directed to unveil its legitimacy strategies and the ideological support coming from it.…”

“…Kulik and Dobler (2023) find that preparers and users of sustainability reports, along with the accounting profession, are the largest groups of participants in the ISSB consultation process, while, surprisingly, there was little participation of investors (as the ISSB claims to be developing standards that aims to meet investors’ needs). The authors conclude that such an imbalance in stakeholder participation poses potential threats to the ISSB’s legitimacy and its standard-setting process (Kulik and Dobler, 2023). Yet, we believe that such an imbalance in stakeholder groups’ participation is always likely to exist in the standard-setting consultation process and mirrors the ideological ground that inspires and supports the standard-setter.…”

Stakeholder Engagement in the Development of the Sustainability Reporting Standards of the Global Reporting Initiative (GRI) and of the International Sustainability Standards Board (ISSB)

“…Three of them currently represent alternative standard setters such as the GRI, the Carbon Disclosure Project (CDP) and the Task Force on Climate-Related Financial Disclosures (TCFD), with the common goal of ensuring interoperability of existing frameworks. Three other members represent financial or investment institutions such as the Glasgow Financial Alliance for Net Zero (GFANZ), the Global Steering Kulik & Dobler (2023)…”

Fenntarthatósági átmenet: kihívások és innovatív megoldások : Nemzetközi tudományos konferencia a Magyar Tudomány Ünnepe alkalmából

“…The GRI ( 2019 Kulik & Dobler (2023) The first impression when comparing the two consultations is the significant difference in the level of participation, which was almost ten times higher for the ISSB. This could be explained by the more general nature of the first ISSB sustainability standard compared to the narrow topic of taxation.…”