Australian legal experts advise against ‘safe harbour’ provisions in ISSB standards

Two of Australia’s legal experts on financial disclosures, Sebastian Hartford-Davis and Kellie Dyon have suggested that “safe harbour” provisions in International Sustainability Standards Board (ISSB) standards are neither necessary nor desirable. The legal advice was sought by a group of institutional investors including the Australian Council of Superannuation Investors, the Investor Group of Climate Change and the Responsible Investment Association Australasia. The call for “safe harbour” provisions was made on the grounds that ISSB disclosures call for forward-looking statements. In Australia, these statements are required to be made on “reasonable grounds”, which heightens the liability risk of directors. While the lawyers shared these concerns, they argued that: “The ISSB draft standards appear likely to assist in exposing existing bad practice, in improving sub-standard practice and in standardising the reporting and disclosure which accompanies good practice. A safe harbour would only undermine those beneficial effects, by removing the effective incentive (liability risk) which will actuate them.”