In 2023, the International Sustainability Standards Board (ISSB) issued a Request for Information Consultation on Agenda Priorities (RFI) seeking feedback on its priorities for its next two-year work plan. Rights CoLab led a response letter signed by ten of its civil society partners, in which it offers four recommendations. The comment appears below and is also available on the ISSB website here

We appreciate the International Sustainability Standards Board’s (ISSB) invitation to provide feedback on agenda priorities for its next two-year work plan. We are human and labor rights specialists with a history of collaborating with the SASB research team to inform the updating of SASB human capital standards. In August 2021, Rights CoLab executed a MoU with the Value Reporting Foundation (VRF), formalizing a two-year relationship as a knowledge partner. This partnership included drawing upon the input of a group of labor rights experts, which Rights CoLab had convened for the express purpose of informing SASB standard setting around “human rights at work” (the words of then SASB CEO Janine Guillot).  Our organizations were part of that initiative.1

In this comment letter we offer four recommendations, which we elaborate upon below: 

  1. Prioritize the enhancement of the Sustainability Accounting Standards Board (SASB) Standards, in the context of additional research on both the Human Capital and Human Rights standard-setting projects; 
  2. Work simultaneously and in a coordinated manner on the Human Capital and Human Rights projects; 
  3. Make financial disclosures related to system-level risk a priority; and 
  4. Institutionalize a channel for civil society subject-matter expertise into ISSB standard setting.
  1. Enhance the SASB Standards

The ISSB’s Request for Information (RFI) solicits feedback on agenda priorities, specifically: enhancing the SASB standards; beginning new research and standard-setting processes; supporting the implementation of ISSB Standards (IFRS S1 and IFRS S2); and researching targeted enhancements to the ISSB Standards. We strongly encourage the ISSB to prioritize enhancement of SASB Human Capital and Human Rights Standards. 

Our experience with the SASB research staff to inform human capital management standard-setting gives us unique insight into the process of developing financially material standards and a keen appreciation of the strong progress the SASB Staff made in 2019-2022 in strengthening SASB human capital standards. With thousands of companies already reporting to the SASB standards, it is a key priority that the ISSB resume the important work of the Value Reporting Foundation to render more robust Human Capital standards. As discussed next, we urge the ISSB to work on human capital and human rights simultaneously and in a coordinated manner, to ensure that the standards to be adopted by the ISSB respond to market needs and practices.

  1. Work simultaneously and in a coordinated manner on human capital and human rights standard setting

We are pleased to see that the RFI acknowledges “the overlap with and connections between the topics of human capital and human rights” and that it “would seek to determine more clearly the boundaries and connections between the two topics” (p. 24). This inclination is correct. Given how closely intertwined the two topics are, the ISSB should undertake standard setting for both Human Capital and Human Rights concurrently as coordinated standard setting projects. The ISSB can do so by leveraging two ISSB assets: 1) SASB’s Preliminary Human Capital Framework and the work of its Diversity, Equity, and Inclusion project; and 2) the CDSB Framework for Reporting Environmental and Social Information. 

As noted above, Human Capital is an area where the ISSB is positioned to make rapid progress. SASB already accomplished much that can be built upon. Following eighteen months of intensive research and consultation, in 2021 SASB staff produced the Preliminary Human Capital Framework, and in the year following they made strong headway on Diversity, Equity, and Inclusion standard setting. 

The SASB Standards Board and staff work on Human Capital responded to strong investor demand for Human Capital disclosures. The Staff presentation to the SASB Standards Board meeting in September 2019, when the Human Capital project was approved as the first SASB Standards revision project, notes that human capital polled as the number one-ranked priority issue among SASB’s Investor Advisory Group (which transitioned to the ISSB as the ISSB Investor Advisory Group). That demand continues to grow: In the United States, since 2017 three separate petitions — by the Human Capital Management Coalition, the Working Group on Human Capital Accounting Disclosure, and Ceres — have been filed at the Securities Exchange Commission advocating for strengthened human capital disclosure. And issuers have started to respond. The Workforce Disclosure Initiative (WDI), which since 2017 has distributed an extensive human capital survey with ambitious metrics, reports a fivefold increase in company participation from 2017 to 2022, when 167 companies completed the survey. 

To be decision-useful, human capital disclosures need to provide investors with visibility into the whole company, which includes its value chain. SASB staff were already headed down the path of a holistic approach to human capital standards when in late 2020 they opted to include the topic of “labor conditions in supply chains” in the Preliminary Human Capital Framework. This topic had previously sat in a separate “Business Models and Innovation” dimension of the SASB Standards Framework, and following that logic, Staff originally considered it out of scope for human capital standard setting. Widening the aperture of human capital is a shift Rights CoLab strongly advocated for. We produced evidence for the financial materiality of labor conditions in supply chains, which was cited in the Preliminary Human Capital Framework (pp 107-108) as justification for inclusion of the topic. With the Preliminary Human Capital Framework in place, staff recommended – and the Standards Board approved – to make “labor conditions in supply chains” the second priority topic for Human Capital standard setting, following Diversity, Equity, and Inclusion (DEI). 

As with Labor Conditions in Supply Chains, standard setting on other Human Capital topics requires clearer understanding of the overlap with human rights. With regard to DEI, for example, the underlying issue is the fundamental right of freedom from discrimination (ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up). ESG practitioners often treat DEI as a topic relevant only to the direct workforce, whereas risks and opportunities of workers in supply chains are commonly equated with modern slavery risks. As noted in Rights CoLab’s 2022 report, What Is DEI? Market Signals of Diversity, Equity, and Inclusion, however, this is a false distinction. Discrimination occurs in different forms across a company’s global operations and presents the most financially material risks for many enterprises. According to Rights CoLab’s report: 

DEI strategies must address whatever forms of institutionalized discrimination exist in a firm’s operations. Yet DEI frameworks still overlook those at greatest risk of exploitation, the minorities, migrants, and other historically marginalized groups who labor in companies’ supplier farms and factories. Until the issue explodes onto the headlines, as in the case of the persecuted Uyghurs consigned to forced labor in China’s Xinjiang Province or the more than 6500 South Asian migrants who have died in Qatar building stadiums for the coming World Cup, managers often fail to recognize that their supply chains are compromised by potential risks of patterns of institutionalized discrimination that often result in modern slavery – a material risk for all companies (p. 23). 

This is just one example of how bringing a human rights lens to Human Capital is essential to developing decision-useful Human Capital standards. Leveraging the strong SASB research team’s work on bridging Human Capital and Human Rights will strengthen standard setting on this topic of high investor interest and at the same time clarify for the market the relationship between human capital and labor rights across the whole company, including its global value chain. 

Another example of the overlap of Human Capital and Human Rights management is the market expectation that companies carry out human rights due diligence. The CDSB Framework identifies human rights and environmental due diligence (HREDD) as the cornerstone materiality issue for all social disclosure. With the European Union set to finalize the Corporate Sustainability Due Diligence Directive in 2024, its materiality is assured. Rights CoLab, together with the EIRIS Foundation, ShareAction/Workforce Disclosure Initiative, the Interfaith Center on Corporate Responsibility (ICCR)/Investor Alliance for Human Rights (IAHR), Rutgers Law Responsible Contracting Project and other investor platforms, is currently undertaking a project on the financial materiality of HREDD. It is being designed to assist the ISSB in refining the concept for an investor audience, and in identifying how HREDD could be integrated throughout S1. 

  1. Make standard-setting on system-level risk a priority

The ISSB requests feedback as to whether there are other activities that should be included within the scope of the ISSB’s work. We strongly encourage the ISSB to expand its scope of work to cover financial disclosures related to system-level risk.

The RFI recognizes that investors acknowledge the importance of system-level risks to financial performance: “Investors have typically viewed inequality in the context of systemic risk” (p. 29). While the ISSB considers entity-level risk exclusively, system-level risk is financially material for much of the market, namely large, diversified investors. Inclusion of systemic risk disclosures will help to harmonize the ISSB and EFRAG standards, showing that the difference between financial and double materiality is, in the words of outgoing IOSCO Board Chair Ashley Alder, “more apparent than real.”

In comments we submitted last year on the S1 General Requirements for Sustainability-related Financial Information Exposure Draft, where we also argued for the ISSB to address system-level risks, we noted that “the concept of sustainability goes beyond the risks and opportunities that affect a single company, to encompass risks and opportunities that affect entire socio-economic and financial systems, which in turn could affect the value of every investor’s portfolio.” Large, diversified investors who dominate the financial markets are most affected by system-level risks. An entity-level approach to risk is useful only to undiversified investors, who are unable to reduce idiosyncratic risk through diversification. By ignoring systemic, portfolio-level risk, the ISSB is in danger of disregarding the risks that the most salient investors emphasize, while emphasizing the kinds of entity-level risks that the bulk of investors can safely disregard.

As systemic risks are generated by externalities, issuers may not be aware of them, and therefore externalities that create systemic risk rarely, if ever, enter into a materiality assessment, and are rarely, if ever, disclosed. It is therefore urgent that the ISSB include among its priorities tackling system-level risk. The Taskforce on Inequality-related Financial Disclosures (TIFD), which in 2023 has evolved into the Taskforce on Inequality and Social-related Financial Disclosures (TISFD), is a disclosure framework that when completed can support the development of robust system-level risk standards. 

  1. Institute a channel for civil society to provide subject-matter expertise into ISSB standard setting.

At several points the RFI highlights the ISSB’s resource constraints. At the same time, as the ISSB moves beyond climate standard-setting, the subject matter expertise required to shape the standards increases exponentially. Any topic touching on social disclosure will benefit from the input of those with the best understanding of the root causes and real-world experience of the social risk and opportunity: affected peoples and the CSOs who represent them. As we argued in our Comments on to the ISSB’s S1 Exposure Draft to S1, “Civil society leaders, including front line human rights defenders, possess the knowledge of the root causes of future risks and therefore are indispensable to risk identification and exposure. They constitute the early warning system of sustainability-related information for both companies and investors.” 

Disregarding their input not only risks missing the mark on the standards developed but could leave the ISSB open to criticism, as has happened with the Taskforce for Nature-related Financial Disclosures (TNFD).

The ISSB can satisfy several objectives by opening an institutionalized channel for civil society input. This issue is particularly significant in light of the ISSB Board’s under-representation of individuals from the Global South, where most negative harms of corporate operations occur. Similar to Right CoLab’s relationship with SASB, TISFD is poised to be a conduit for civil society input and a knowledge partner to the ISSB to inform standard setting on inequality and social-related risks. 

Thank you for the opportunity to comment on the ISSB’s Agenda Priorities. We look forward to ongoing engagement. 


Paul Rissman – Rights CoLab

Joanne Bauer – Rights CoLab

Kaylea Noce – As You Sow

Peter Webster – EIRIS Foundation

Sif Thorgeirsson – Fair Labor Association

Sam Jones – Heartland Initiative

Michael Goldhaber – NYU Stern Center for Business and Human Rights

Mahlet Getachew – PolicyLink

Alex Ducett – Social Accountability International

Delilah Rothenberg – The Predistribution Initiative

Shawn MacDonald – Verité

Katharine Bryant – Walk Free Foundation

  1.  It is our understanding that this is the only MoU that SASB or the Value Reporting Foundation had executed with civil society to provide subject matter expertise. Other members of the Expert Group included Workforce Disclosure Initiative/ShareAction, Capitals Coalition, Interfaith Center of Corporate Responsibility/Investor Alliance for Human Rights, and Oxfam.  Each of these organizations has submitted separate letters in response to the ISSB’s RFI which similarly call for prioritizing human rights and human capital.  
Photo by AbsolutVision on Unsplash