ABA Urges ISSB to Integrate Digital Taxonomy Efforts into Climate Implementation

Dear Mr. Faber:

The American Bankers Association (ABA) appreciates the opportunity to comment on the International Sustainability Standards Board's IFRS Sustainability Disclosure Taxonomy: Proposed Taxonomy (Proposed Taxonomy). The Proposed Taxonomy seeks to facilitate consumption of sustainability-related financial information in a digital format by investors as well as jurisdictional authorities that have enacted sustainability-related reporting requirements. ABA members consist of lenders, investment bankers, asset managers, investment analysts and asset custodians and, consequently, bring perspectives from both the users of the information as well as the preparers. Therefore, we bring perspectives from a wide range of stakeholders.

ABA supports efforts to develop a reporting taxonomy that both addresses users of sustainability-related financial information and can be prepared without undue cost. We believe the general principles underlying the Proposed Taxonomy appear to address the data needs at the time standards S1 and S2 become effective. However, given the overall nascient state of sustainability reporting and analysis, ABA believes that more discussion among stakeholders will be needed before an effective and generally accepted taxonomy can be finalized. Development of the taxonomy should be a significant area to be addressed within discussions conducted within each of the individual industry-based implementation groups we have recommended in our letter responding to ISSB's recent Request for Information – Consultation on Agenda Priorities and not finalized within the separate project it appears to be.

Identification of the needs of investors, regulators, rating agencies, and data aggregators, as well as the operational challenges for preparers within the implementation group discussions may result in reconsideration of various tags within the Proposed Taxonomy. For example, auditing and assurance work may vary in scope (limited assurance vs. reasonable assurance) and the resulting 3rd party opinions and attestations (both in addressing the disclosed amount and in the effectiveness of internal controls) can have multiple result possibilities and, thus, the proposed Boolean (True/False) tags may not be appropriate. Other examples may similarly result from foreseeable market developments in the granularity and scope of factors within physical risk analyses and other metrics.

In summary, we believe integrating review of the Proposed Taxonomy within S1/S2 transition implementation group discussions will most effectively address stakeholder needs both currently and in the foreseeable future. Such groups should include not only investors and preparers, but also regulators, rating agencies, and data aggregators.

Thank you for your attention to this concern and for considering our recommendations. Please feel free to contact me ([email protected]; 202-663-4986) if you would like to discuss this further.

Sincerely,
Michael L. Gullette