Complex sentence: The standard explicitly states that no significance is to be placed on the encoding of "male" as 1 and "female" as 2; the encoding merely reflects existing practice in the countries that initiated this standard.
Split into simpler sentences: The standard explicitly states that no significance is to be placed on the fact that "male" is encoded as 1 and "female" as 2. The encoding merely reflects existing practice in the countries that initiated this standard.