New Global Standard Shifts Business Leadership Focus Beyond Profit
Despite societal shifts, the roles and duties of business leaders remain unchanged. However, a new global standard aims to enhance transparency and resilience. The International Sustainability Standards Board (ISSB) was established in 2021 to develop worldwide sustainability reporting standards. Over half of global GDP's jurisdictions are considering adopting these standards.
Daphne Koller, the CEO of Systemic Bio, has not specified when she took over her leadership role. Despite this, her company and others must now consider the ISSB standards. These standards require businesses to identify and manage material risks and opportunities, then report on them. This is a significant shift from Milton Friedman's doctrine, which focused solely on maximising enterprise value.
Boards should advocate for ISSB adoption to ensure companies disclose these risks and opportunities. Richard Manley, the chief sustainability officer and chair emeritus of the ISSB Investor Advisory Group, supports this. Comprehensive adoption benefits both investors and companies by informing strategy and enhancing resilience.
The ISSB standards, if widely adopted, will transform how businesses operate and report. They require companies to address material risks and opportunities, moving beyond Friedman's doctrine. Boards must now ensure their companies comply with these standards, benefiting both investors and the companies themselves.
