Launched in September 2024, the TISFD envisions an economic system in which businesses effectively address their impacts, dependencies, risks and opportunities related to people – resulting in fairer, stronger societies and economies.
What is the need for the TISFD?
People around the world have benefited from the social and economic progress made over the last century from a growing private sector, technological advances and rapid globalisation. Yet these gains have not been distributed evenly. Hundreds of millions of people are still unable to attain basic needs, and within many countries, inequalities of income and wealth stand at historic highs.[1]
These social challenges present risks and opportunities to market actors. Some of the risks include eroding social cohesion in society, undermining institutions and trust in government, hampering productivity, reducing economic dynamism and increasing financial instability. On the flip side, tackling inequalities presents significant opportunities for economies and market actors by rebuilding social capital and stability.
Altogether, decision-useful information is essential for market actors to act rationally, which is what the TISFD aims to support.
What are the proposed deliverables?
The TISFD will produce a global disclosure framework that aligns with the four-pillar structure of the disclosure frameworks of TCFD and TNFD, with the content tailored to topics related to people.
The TISFD will also produce guidance and recommendations to aid the implementation of the disclosure framework for businesses.
Purpose
Within one to two years of launching the disclosure framework, the TISFD’s short-term objective is to enable businesses and financial institutions to:
- recognise inequality and social-related issues as a source of entity-level and system-level risks, as well as the opportunities associated with improving outcomes for people;
- strengthen the identification, assessment and reporting of social- and inequality-related impacts, dependencies, risks and opportunities; and
- act accordingly to respect human rights, improve outcomes for people and reduce inequalities, and thereby mitigate financial risks and realise financial opportunities.
In the medium and long term, the TISFD aims to work with policymakers and standard-setters to embed its recommendations in standards and laws equipping civil society organisations with access to information that allows them to engage responsibly with the private sector.
Ultimately, the TISFD will enable businesses and financial institutions to collectively act to mitigate the system-level risks associated with inequalities and other social issues and seize the significant opportunities that result from building a fairer world.
Whilst the framework is currently under development, businesses should evaluate their impacts on people and potential inequalities, and start preparing for more robust and methodological reporting on these issues.
To find out more about how Luminous can help with your social-related issues and reporting, please get in touch: Anokhi.Kalayil@Luminous.co.uk.
[1] https://cdn.prod.website-files.com/66bad03afc5ba5a52ce98e40/66ed70bd9aa01594e74cb6bd_People%20in%20Scope%20Sept%202024.pdf
