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Monday, Jun 24, 2024

ISOS Group Focuses on Sustainability Reporting

In the early 2000s, ISOS Group CEO Nancy Mancilla was working in the Netherlands at Triodos Bank – a pioneer in social investment banking taking ESG (environmental, social and governance) factors into consideration for investment decisions.

Part of Mancilla’s job was to ask U.S. companies about their greenhouse gas emissions and other environmental impacts. However, she discovered that U.S. companies were behind Europe in tracking these metrics for investors.

So, in 2008, Mancilla founded ISOS Group, a San Diego-based company that helps organizations understand what their economic, environmental and social impacts are; how to measure them, communicate them and report them; and how to improve them by maximizing positive and minimizing negative impacts.

“At our core we really believe in the power of transparency to drive and accelerate positive change,” said ISOS Group Managing Director and COO Jennifer Pontzer.


ISOS Group offers three main services to companies: certified training and professional coaching on leading sustainability standards and frameworks; consulting on strategies to develop ESG foundations; and helping draft sustainability reporting and ESG disclosures, as well as third-party verification and assurance of disclosures to investors.


Regulatory Changes


“[Investors] want assurance, just as they do with financial information, that they’re getting quality information,” Pontzer said. “It’s a very interesting time and this field has evolved so much, this area of sustainability reporting, also referred to as non-financial reporting. This is information that has not traditionally been in financial reports which are regulated about what goes into them in the U.S. by the SEC.”


That tradition of limiting SEC filings to financial statements only may soon change.


On March 21, the SEC proposed a mandate for climate risk disclosure to be included on a company’s 10-K form. The new rules would require companies to report information about their governance, risk management and strategy with respect to climate-related risks.


The proposal would also require disclosure of any sustainability targets or commitments made by a company, as well as its plan to achieve those targets and its transition plan, if it has them.


The mandate would require detailed reporting on greenhouse gas emissions that would even include reporting on “scope 3” emissions from suppliers.


The SEC is currently reviewing the rule and taking comment for 60 days.


Pontzer said the proposed rules are similar to when companies were required to report dealings with possible conflict minerals – ones mined in conflict zones often by forced labor. Investors wanted to know that companies had clean supply chains that were not at risk of sanctions.  

“When something rises to that level, that this is material to making a decision, then that is when the SEC will step in and say we need to expand our requirements and mandate this,” she said. “So we’re seeing a similar situation with climate change.”


For example, investors in a food company would be interested in how drought, wildfire or other climate risks could disrupt supply chains. In addition to investors, companies are also increasingly being pressured by clients and customers to report on their sustainability, Pontzer said.


‘Alphabet Soup’ of Standards     

Part of what ISOS Group does, Pontzer explained, is help companies navigate the “alphabet soup” of standards that have been created to measure sustainability. When ISOS Group began in 2008, it specialized in training and consulting in the Global Reporting Initiative (GRI) standards, which were adopted that same year.  

ISOS Group also developed a similar partnership with Carbon Disclosure Project (CDP), which has the largest database of companies submitting greenhouse gas emissions, climate strategy information and water and forest management, which all get rated.


The Sustainability Accounting Standards Board (SASB) has its own set of standards that look at companies through an investment lens and includes some financial risk and impact reporting that is voluntary.


As regulatory bodies like the SEC move toward requiring sustainability reporting, there has been a movement toward “more harmonization and global standards,” Pontzer said. “There’s been a need for, and companies desire, a single set of standards. The analysts are looking for that so that work is underway.”


Certified B Corp

In addition to helping companies report on their ESG, ISOS Group “committed to walking the talk” by taking the B Lab Assessment and becoming a certified B Corporation, which derives its standards from the GRI, Pontzer said.


“It’s through the B Corp network that we see the same ethos in others and feel that business transformation is possible,” Mancilla said.


“We were thrilled to recertify our B Corp status in 2019 as it reinforces ISOS Group’s position as a mission-driven company,” she added, “one that doesn’t pursue every billable hour but is oriented toward enabling meaningful change; one that doesn’t see its employees as numbers but as family; one that prides itself on infusing positive energy into everything it does.”

ISOS Group

Founded: 2008

CEO: Nancy Mancilla

Business: Sustainability consulting and training

Headquarters: San Diego

Revenue: Undisclosed

Employees: 15

Website: www.isosgroup.com

Notable: ISOS Group has trained more participants in the Global Reporting Initiative (GRI) standards than any other GRI partner. 


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