One Small Step From Financial Materiality to Sesquimateriality: A Critical Conceptual Leap for the ISSB

Alexander, Frederick

doi:10.2139/ssrn.4056602

Cited by 4 publications

(2 citation statements)

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“…This approach aims to make corporate disclosures serve a wider goal of corporate responsibility to society at-large beyond the narrow financial perspective. As the International Sustainability Standards Board (ISSB) has ruled out the double materiality approach in its framework, it is up to regulatory bodies to include it in their mandatory requirements (de Arriba-Sellier 2023; Alexander and Ensign- Barstow 2022).…”

Section: Align Finance With the Paris Agreementmentioning

confidence: 99%

State of Climate Action 2023

Boehm,

Jeffery,

Hecke

et al. 2023

WRIPUB

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The State of Climate Action 2023 provides the world’s most comprehensive roadmap of how to close the gap in climate action across sectors to limit global warming to 1.5°C. It finds that recent progress toward 1.5°C-aligned targets isn’t happening at the pace and scale necessary and highlights where action must urgently accelerate this decade to reduce greenhouse gas emissions, scale up carbon removal and increase climate finance.

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Section: Align Finance With the Paris Agreementmentioning

confidence: 99%

State of Climate Action 2023

Boehm,

Jeffery,

Hecke

et al. 2023

WRIPUB

View full text Add to dashboard Cite

show abstract

“…These announcements were well received, with various stakeholders noting how the establishment of the ISSB was a breakthrough in this field [26,27]. Nonetheless, scholars and practitioners [17,18] noted that the buildup to the ISSB happened through a series of discussions and political debates that took place behind the scenes, and, as a result, have not previously been analyzed in detail.…”

Section: Introduction 1background and Objectivesmentioning

confidence: 99%

The Role of Private Philanthropy in Sustainability Standards Harmonization: A Case Study

et al. 2023

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Voluntary sustainability standards are often inconsistent and fragmented in terms of governance, complementarity, global applicability, and traction. Calls to harmonize this space have been intensifying. The objective of this study was to better understand the role that private philanthropy has played in helping to pave the way for globally consistent and comparable sustainability-related standards in the corporate sector, through the analysis of a case study. Twenty-four interviews with 31 stakeholders were carried out between October 2021 and January 2022, using a semi-structured questionnaire. The interview responses and qualitative data were analyzed using Atlas Ti software and open coding procedures. All interviewees spoke positively about the philanthropic intervention in question, and five main themes emerged: (1) strategic relevance and effective targeting of the intervention; (2) trust-building tactics: expertise, neutrality, and facilitation; (3) flexible and strategic interventions; (4) cultivating the standards harmonization philanthropic network; (5) strategic directions for philanthropy, moving forward. Three specific tactical approaches were identified that could help to orient future philanthropic action: (a) the steering of philanthropic support (both funding and non-financial support) toward ventures where such interventions can be advantageous, relative to formalized governmental interventions; (b) the facilitation of partnerships and trust, amid delicate interpersonal and organizational politics among standard-setters and donors alike; (c) the flexibility and specificity of grant requirements, coupled with a long-term vision.

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The power of purpose: how material sustainability and stakeholder orientation drive financial success

Joudi,

Mansourfar,

Homayoun

et al. 2024

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Purpose Considering the standards developed by the Sustainability Accounting Standards Board (SASB), this study aims to examine whether the link between material sustainability and financial performance depends on the extent to which the company is oriented toward stakeholders. Design/methodology/approach To test the predictions, 13,942 firm-year observations from 43 different countries are used, covering the period from 2010 to 2019. Using a hand-mapping approach to match the indicators suggested by the SASB with those of the ASSET4, the authors realize that there are 170 material sustainability indicators among 466 indicators of the ASSET4. The authors use three different methods to verify if the materiality matters, including the alphas obtained from the Fama and French factor models, comparing the average abnormal returns of the portfolios and the bootstrapped Cramer technique. Findings The findings show that companies investing in material sustainability activities perform better than those investing in immaterial activities. Also, consistent with the theoretical foundations, the authors find that the effect of investing in material sustainability activities is more pronounced in stakeholder-oriented countries than that in shareholder-oriented countries. The results are robust to a battery of sensitivity tests. Research limitations/implications Owing to COVID-19 in late 2019, data from 2020 to 2022 have not been used to obtain reliable results. Practical implications The results obtained in the current research provide valuable guidance for investors to make investments considering the degree of materiality of sustainability activities in different industries. It also helps managers to increase the company’s financial performance, make efficient decisions related to investment in sustainability activities and find investment strategies on the material sustainability issues in their industries. Social implications This study provides a clearer understanding of investment in sustainability activities in different industries by separating material and immaterial sustainability activities in stakeholder and shareholder-oriented countries, and the results obtained can change the perspective of investors and company managers regarding investing in such activities in different countries. Investing in more materiality sustainability activities than the immateriality dimension can be new opportunities for companies to achieve predetermined goals, help retain and attract business partners or be a source of innovation for new product lines or services. Internal morale and employee engagement may increase while increasing productivity and firm performance. This discussion opens the way for future research. Originality/value This study provides insight into the effect of investing in material and immaterial sustainability activities in different industries on the company’s performance in shareholder and stakeholder-oriented countries.

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One Small Step From Financial Materiality to Sesquimateriality: A Critical Conceptual Leap for the ISSB

Cited by 4 publications

References 0 publications

State of Climate Action 2023

State of Climate Action 2023

The Role of Private Philanthropy in Sustainability Standards Harmonization: A Case Study

The power of purpose: how material sustainability and stakeholder orientation drive financial success

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