Helping investors see which companies are resilient enough to withstand climate change is Emmanuel Faber’s driving principle. The chair of the International Sustainability Standards Board, which plans to set up shop in Geneva next year, talks about the move and why ESG has fallen out of fashion.
Geneva is poised to become the global hub for accounting standards that go beyond the traditional finance metrics. The International Sustainability Standards Board (ISSB), which develops sustainability reporting standards for businesses, is set to establish its global headquarters in the city by mid-2027. Its president, Emmanuel Faber, explains the significance of this move and why sustainability analysis – rooted in environmental, social and governance (ESG) factors – is no longer in vogue.
Faber, the former chief executive officer of Danone, will speak this Thursday at an impact innovation conference organised by E4S, an academic hub affiliated with the University of Lausanne, the International Institute for Management Development and the Swiss Federal Technology Institute of Lausanne, EPFL. He will also take part in Building Bridges, Geneva’s annual sustainable finance summit, in early October.
Le Temps: Between wars, the affordability crisis and soaring debt in major economies, sustainability has faded from the headlines. How does this affect the ISSB’s work on green accounting standards?
Emmanuel Faber: The traditional ESG approach – assessing companies based on environmental, social and governance factors – has indeed fallen out of fashion. The pioneering movement inspired a myriad of norms and accounting systems. But these were voluntary, inconsistent and disconnected, making comparisons impossible and failing to shift capital flows. That’s why the ISSB was launched in 2021: to create a single, globally comparable language for financial markets – one that integrates with traditional accounting and is auditable.
Has the concept of sustainability changed in recent years?
Its core components have. The priority now is assessing the long-term viability of business models that insurers, banks and investors fund. How resilient are companies in the face of crises and modern challenges, particularly climate change? Will there be enough water to supply the data centres we’re investing in? How will extreme climate events like El Niño impact Central American economies and beyond? There’s a growing awareness of these issues. Major sovereign wealth funds are already adopting our standards – not just to evaluate companies, but also the sovereign debt they invest in. After all, when you lend to a country for 10 or 30 years, you need to understand how climate change will affect its ability to repay.
How many countries have committed to using your non-financial standards?
So far, 46 countries have decided to adopt ISSB standards. This includes many G20 nations, as well as numerous developing and emerging economies that want to build economic resilience and prepare for major shifts in global trade. If Europe ever introduces carbon border adjustments, these standards will simplify reporting on greenhouse gas emissions and deforestation, helping economies adapt.
Why did the ISSB choose Geneva for its headquarters?
We currently have offices in Frankfurt, Montreal, Beijing and Tokyo. Geneva will serve as our global base, supported by funding from the Swiss federal government, the canton of Geneva, philanthropic organisations and private-sector partners for the next five years. The transition will begin next year, with full operations starting by mid-2027.
What does Geneva bring to the ISSB?
Beyond financial support, Geneva offers a unique ecosystem of multilateralism, hosting international organisations like the International Organization for Standardization, the World Economic Forum and the World Business Council for Sustainable Development – a coalition of 190 multinationals committed to sustainability. We’re also in discussions with the State Secretariat for Economic Affairs (Swiss economy ministry), which is interested in our work on emerging markets.
Geneva will host our annual working group of 40 countries, bringing together regulators from around the world, as well as public conferences and most of our board meetings, which are public.
The ISSB was created by the IFRS Foundation, which sets accounting standards in over 140 countries. As an Anglo-Saxon initiative, how do you operate without the support of the US government, which opposes sustainability standards?
The US federal administration is not in favour of sustainability standards. Furthermore, the Securities and Exchange Commission recently reiterated that companies must disclose all material risks, including climate-related ones, arguing that no new standards are needed. Yet, there is such a global demand for a unified accounting language to allow prudent investors and regulators to compare corporate resilience effectively.
That said, California is already adopting our greenhouse gas emission standards, meaning thousands of companies – not just American ones – will have to comply. Finally, major US investors continue to say our standards are useful, and an increasing number of American firms already report under ISSB rules in other regions. In the US, the balance of power is shifting, and adoption is happening.
This article was originally published in French in Le Temps. It has been adapted and translated into English by Geneva Solutions. Articles from third-party websites are not licensed under Creative Commons and cannot be republished without the media’s consent. Geneva Solutions used an AI tool to assist with the translation of this article. The final version was verified and edited by our editorial team.