The Taskforce on Inequality andSocial-related Financial Disclosures
TISFD Proposed Scope and Mandate
This document outlines recommendations on the possible scopeand mandate of the TISFD’s work, the approach it might take toquestions related to materiality and its relation to other frameworks
and standards, and its intended outputs, outcomes, and impacts. We
welcome your feedback, questions, and reflections on the following
seven elements:
Thematic scope
Materiality approach
Alignment with international standards of conduct
Interoperability with existing standards and frameworks
Proposed outputs
Intended outcomes and impacts
Gaps and weaknesses in metrics and indicators
To share your views on any or all of the elements in this document,
please use this feedback form or go tohttps://qualtricsxms2qd6sl6z.qualtrics.com/jfe/form/SV_2lxTHPKp7y
u7OF8. The feedback form is also accessible on the TISFD site at
www.TISFD.org/feedback.
Please note that the TISFD Working Group will accept feedback on arolling basis. We will publish a document with key takeaways fromthe feedback process ahead of the formal launch of the Taskforce in
September 2024.

www.TISFD.org

Taskforce on Inequality and Social-related Financial Disclosures1. Thematic Scope
Inequality is arguably the defining social issue of our time. In many countries, inequalities inincome and wealth stand at long-term record highs, as do broader divisions in society as awhole. While the prevalence of extreme wealth has risen, many people are unable toexercise their human rights and meet their basic social and economic needs, and theprospect of doing so may have become more remote since the Covid pandemic. Even
where people’s basic needs are met, the benefits of productivity increases have beenshared unevenly, resulting in societal cleavages. Such divisions are exacerbated byinequalities in various aspects of people’s well-being, such as physical and mental healthoutcomes, loneliness, and feelings of being left out of society. Climate change and natureloss are also exacerbating inequalities, as the poor and marginalized are more severely
impacted and less able to respond to change.
These dynamics erode human capital and undermine social cohesion and stability. They
impede progress towards addressing climate change and ecological degradation. And
they increase financial risks, including at the portfolio and macro-economic level.
Regulators and policy makers, companies, and investors each have a critical role to play insafeguarding people’s rights and well-being to reduce the accumulation of these risks insociety and the economy.

The Working Group proposes that the Taskforce approach social and inequality-related
issues in an integrated and coherent manner that reflects the breadth of issues concerned
and the complementarities between companies’ responsibility to respect human rights,
efforts to reduce inequalities and enhance people’s well-being, and investments in humanand social capital. To enable this integrated approach, the Taskforce will need to set out
conceptual foundations that clarify and articulate the relationships between impacts anddependencies on people and associated risks and opportunities. This includes clarifying
the various themes, topics or dimensions that constitute people’s state of being, thedifferent stakeholders affected, and the various types of inequalities. These conceptual
foundations should also reflect the deep interlinkages between social and inequalityrelated issues on the one hand, and efforts to address climate change and nature-relatedrisks on the other.
A broad approach to social and inequality-related issues does not necessarily mean that theTaskforce’s disclosure recommendations will address every social issue separately. Keeping
in mind the broad scope of these issues, the TISFD will prioritize disclosure
recommendations that are of general relevance and/or that most meaningfully allow users
of information to respond to widespread or significant social and inequality-related risks,
opportunities and impacts.

2. Materiality Approach
The information that companies report (their “disclosures”) related to environmental andsocial issues depends on the purpose of the disclosures and the audience for which they
are intended. Companies may report to several audiences, or stakeholder groups, such as
the public (including civil society organizations and representatives of affectedrightsholders), the government, or to investors or lenders.
Investors are often interested in information related to risks to their financial interests. Other
audiences, such as civil society organisations, tend to be interested in understanding theways in which businesses and financial institutions impact people and the naturalenvironment. Increasingly, some investors are interested in that information as well,including because impacts on people can be the root cause of, or intertwined with, financial
risks and opportunities, and pose portfolio-level risks.
The relevance and significance of information is often referred to as “materiality”. “Financial
materiality” refers to information that investors need to make decisions about what will
create financial value over the short, medium or long term. “Impact materiality” refers to
information that a wider audience uses to understand an organisation’s significant impacts
on people and the natural environment. These materiality “perspectives” are different but
overlap with each other, meaning that some information may be material from both
perspectives (for example: GHG emissions, when they pose transition risks or child labor in
manufacturing due to reputational risks).

The Working Group proposes that the Taskforce develop disclosure recommendations thatare interoperable with both an impact materiality perspective and a financial materiality
perspective. Given that different standard-setters and regulators adopt different materiality
perspectives, we suggest that the Taskforce should seek to delineate these perspectives
where feasible, while recognizing that the identification of an organization’smaterial/significant impacts is an essential basis for identifying many financially material
matters.
The Taskforce should also explore the materiality of inequality as a system-level risk. To doso, we suggest that the Taskforce evidence the relationships between organizations’impacts, the accumulation of inequalities, and system-level financial effects for companies,
investors, markets and financial stability. We suggest that the Taskforce should explore
where and how impact materiality and financial materiality overlap, taking account ofdifferent time horizons, and that it consider the extent to which the metrics and indicators
most relevant for each materiality perspective may also overlap.

3. Alignment with International Standards ofConduct
International standards of conduct that address the responsibility of business and financial
institutions with regard to negative impacts on people’s human rights are of central
relevance to the assessment and disclosure of inequality and social-related issues. Thesestandards are the UN Guiding Principles on Business and Human Rights, the OECD
Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of Principles
concerning Multinational Enterprises and Social Policy. They include due diligence
expectations for the management of risks of adverse impacts. These standards have beenendorsed by Governments and are beginning to be transposed into legislation andintegrated into reporting standards in a number of jurisdictions. They have also been taken
up by companies and industry groups, investors and investor groups, multi-stakeholder
initiatives, civil society and labor organizations nationally and globally.

The Working Group proposes that the Taskforce ensure that its Disclosure Frameworkaligns with these international standards. The Working Group also acknowledges the needfor the Taskforce to consider whether additional frameworks or guidance may be necessary
to underpin its Disclosure Framework with regard to the management of financially material
risks, including the systemic risk of inequality (and related opportunities), as well as withregard to the management of business and investor impacts on inequalities. In order toarrive at a clear view on this, the Working Group suggests that the Taskforce first develop a
clear evidence base for the pathways between impacts on people, inequalities andfinancially material risks, and assess whether sufficient guidance exists on the identification,assessment and management of impacts and risks.

4. Interoperability with Existing Standards andFrameworks
A number of standard-setters exist in the sustainability reporting space. Notable standardsetters are:the International Sustainability Standards Board (ISSB), which sets standards onsustainability-related financial disclosures, intended to guide corporate reporting ofsustainability-related information that is used to evaluate risks and opportunities for thecompany’s financial value creation; and,the Global Reporting Initiative (GRI), which sets standards for organisations (including
both private and public sector entities) to report on their impacts on people, theenvironment and the economy, for a multi-stakeholder audience.
Increasingly, jurisdictions are mandating sustainability disclosures, for example theEuropean Sustainability Reporting Standards (ESRS) adopted by the European Commission.
In addition, previous Taskforces (respectively, TNFD and TCFD) have successfully provided
disclosure recommendations on nature- and climate- related issues. These
recommendations are currently being used by companies and investors, and, in the case of
TCFD, have been incorporated into law by some jurisdictions and integrated into the workof the ISSB. These Taskforces can provide important precedents, as well as inspiration, for
the TISFD.

The Working Group underscores that the Taskforce is not intended to be a standard-setter,but that it should strengthen the development of social and inequality-related financial
disclosures and be available as a knowledge partner to standard-setting bodies andjurisdictions such as those mentioned above. The Working Group also proposes that theTaskforce should leverage and build upon the indicators and metrics in existing reporting
standards and frameworks.
The Taskforce should conduct a thorough review of the content of these reporting
standards and frameworks, engage with the organizations that have developed or adopted
them, and carefully analyse the indicators and metrics used, including the robustness of theinsights they provide and any gaps they leave unaddressed. The Working Group suggeststhat this analysis should inform Taskforce decisions on which indicators and metrics could
be included in or cross-referenced under the TISFD Disclosure Framework.

The Working Group recognizes that the Taskforce will need to strike the right balance
between maintaining the value of the approaches adopted by TCFD and TNFD andadapting them to address the specificities of inequality and social-related issues.
Specifically, the TISFD should strive to align with the overarching structure of the disclosure
frameworks delivered by these previous Taskforces, while ensuring that the framework’s
content adequately reflects the existence of international standards of conduct with regard
to the impacts of business and finance on people (the UN Guiding Principles on Businessand Human Rights and the OECD Guidelines for Multinational Enterprises), and theparticular ways in which impacts on social issues lead to financial risks, including systemlevel risks such as inequality.
Together with disclosure recommendations on climate and nature-related issues, the
TISFD’s recommendations can represent a tool to facilitate efforts towards a just transition,in which climate-, nature- and social- and inequality-related risks and impacts are addressedin a coherent and complementary way.
Finally, the Working Group recognizes that a Taskforce on inequality and social-related
issues will need to ensure that it does not perpetuate inequalities in the effort to address
them. It will therefore be important that it include participation by civil society, labororganizations and marginalized groups alongside investors and business in the Taskforce’s
structures, deliberations and decisions.

5. Proposed Outputs
The Working Groups envisions that, among others, the TISFD will produce the following
outputs:
A global disclosure framework: A global framework containing disclosure
recommendations and associated guidance.
Conceptual foundations and definitions: An organising framework for understanding
key social and inequality-related concepts and how they interrelate.
A body of evidence on impact and risk channels: A repository of existing and new
research that sheds light on the relationships between business and investor impacts on
people and inequalities, associated idiosyncratic risks, and the system-level risks
associated with inequalities and social-related issues.
Guidance on metrics, indicators, and data: Guidance on the use of meaningful anddecision-useful metrics, indicators and data in the reporting of inequality and socialrelated impacts, dependencies, risks and opportunities.
Guidance on the use of thresholds and targets: Guidance on the use of thresholds
and targets in the reporting of social and inequality-related impacts, dependencies,
risks and opportunities
Guidance on identification and assessment: Guidance on the identification andassessment of material inequality and social-related impacts, dependencies, risks andopportunities.
Capacity-building resources: Accompanying materials to support a broad range ofaudiences, including businesses, investors, policy makers, labour unions, civil society
organisations, and affected stakeholders, such as workers and rural and indigenous
communities, in using the TISFD’s disclosure framework and recommendations.

6. Intended Outcomes and Impacts
The Working Group considers that the ultimate impact of the Taskforce’s work to develop
the Disclosure Framework should be to reduce short, medium, and especially long-term
financial risks, to strengthen financial stability and resilience, to improve macro-level
economic outcomes, and ultimately to deliver better outcomes for people, including
greater respect for human rights, and increased human development and well-being.
To do so, the TISFD will focus on the delivering the following outcomes:
Companies and financial institutions understanding their impacts and dependencies on
people and strengthening their identification, measurement, management anddisclosure of inequality and social-related impacts and the associated financial risks andopportunities
Financial institutions recognizing inequality as a system-level risk (and missed
opportunity, as concerns the benefits of reducing inequality), understanding theaggregate impacts of both investees and their own activities on inequalities; andintegrating this understanding in their assessment of financial risks and how they
allocate and price capital, engage with investees, and structure investments
Standard-setters and policy makers embedding TISFD recommendations in reporting
standards and laws, fostering global harmonization
Benchmarking and rating providers improving the accuracy and relevance of socialrelated benchmarks and ratings
Civil society organizations being able to hold companies and financial institutions toaccount for how they address inequality and social-related issues
Governments, financial supervisors and macroprudential authorities using disclosures toformulate more effective policies and strategies for the safeguarding of societies andfinancial systems

7. Gaps and Weaknesses in Metrics andIndicators
The Working Group recognises that, while existing standards contain useful disclosure
indicators and metrics, there remains a perceived need for meaningful and decision-usefulmetrics and indicators on companies’ and investors’ social and inequality related impacts,
dependencies, risks and opportunities.

Learn More
To learn more about TISFD, including opportunities forfurther engagement, please visit www.TISFD.org.