Developments in the ‘S’ Reporting and Disclosure Landscape: The Taskforce on Inequality and Social-related Financial Disclosures (TISFD)

Launched on 23 September, the Taskforce on Inequality and Social-related Financial Disclosures (TISFD) is an initiative that will develop a global framework of recommendations and guidance to enable companies to understand, report and act on their inequality and social-related financial risks, opportunities, dependencies and impacts. 

The TISFD has the support of more than 100 organisations, including important players from the world of ESG disclosure frameworks, such as the World Benchmarking Alliance, the Global Reporting Initiative (GRI) and a number of United Nations agencies including the International Labour Organisation. We can therefore expect the TISFD’s outputs to be influential. This blog summarises the scope of the TISFD’s mandate, its relationship with existing disclosure frameworks, and anticipated next steps.

Scope of mandate and governance 

The TISFD envisions an economic and financial system in which businesses and financial institutions effectively address their impacts, dependencies, risks, and opportunities related to people, resulting in fairer and stronger societies and economies. The TISFD sets out an ambitious programme of outputs, which centre on a global disclosure framework, as set out in the TISFD’s scoping paper, People in Scope, which outlines the vision, scope, governance model, and indicative work plan for the TISFD. 

Whilst the TISFD is yet to determine the conceptual foundations that will underpin its disclosure framework, it plans to focus on social issues and inequalities that are relevant to the effective management of entity-level impacts, dependencies, risks or opportunities by businesses and financial institutions and that are relevant for a large range of reporting organisations. 

Much like the EU’s Corporate Sustainability Reporting Directive, the TISFD is expected to adopt a framework that is compatible with both the impact of inequality and social-related matters on a company (financial materiality), as well as the impact of the company on those matters (impact materiality). It is also expected to explore the materiality of system-level risks associated with inequalities and social-related issues.

The co-chairs were announced on Monday, and the wider governance structure of the TISFD is in the process of being established. A multi-stakeholder Steering Committee will oversee the work of the TISFD Secretariat and will launch Working Groups with specific mandates. The TISFD’s work will be informed by the TISFD Alliance, a global multi-sector consultative group of organisations who will support the TISFD’s mission and be invited to provide input into the TISFD’s research and recommendations, and the TISFD’s Founding Partners, made up of a number of organisations across the public, social, and private sectors. The TISFD is also exploring methods by which it will engage with stakeholders. 

Position in relation to existing disclosure frameworks

The TISFD’s Technical Proposal highlights the increasing volume of mandatory sustainability disclosures, such as the European Sustainability Reporting Standards, and recognises the incorporation of the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations into law in some jurisdictions, including the UK. 

The TISFD's disclosure framework is expected to be interoperable with existing reporting standards and frameworks such as the TCFD framework (which is incorporated into the International Sustainability Standards Board’s (ISSB) IFRS Sustainability Disclosure Standards) and the Taskforce on Nature-related Financial Disclosures framework, including by following their four-pillar approach. Guided by the design principle of linking people and planet, the TISFD aims to enable reporting that can facilitate a just transition where climate, nature, social and inequality-related risks and impacts can be addressed in a holistic and integrated way. 

Within the current disclosure frameworks landscape, the TISFD positions itself as a potential knowledge partner to standard setting bodies such as the ISSB and the GRI, with the view that it will be considered in the future work of these bodies. For example, the TISFD’s broader scope of social and inequality topics may influence the ISSB’s current narrower scope on human capital. 

Next steps

The scoping paper sets out a proposed workplan for the TISFD. The current work phase is to establish the governance bodies of the Taskforce, including selecting the Steering Committee and on-boarding the Secretariat, and to begin to establish the Alliance.