This week, I want to step back and look at the framework that quietly shapes them both: ISIC, the International Standard Industrial Classification of All Economic Activities, developed and maintained by the United Nations.
If NAICS and NACE are regional dialects, ISIC is the underlying grammar. It’s the UN’s official framework for categorizing what organizations do. And while it may feel more abstract than its regional counterparts, its influence runs deeper than most people realize.
Really, ISIC is the template from which many national and regional systems are built. Here’s how the system works:
Primary use
ISIC is used by international organizations such as the UN, World Bank, IMF, UNIDO, and the ILO as the backbone for economic statistics, surveys, and registers. Its main purpose is to make industry data comparable across borders and to guide countries as they structure their own national classification systems.
Concept
ISIC codes are determined by an organization’s principal economic activity—the activity that generates the most value. Both the nature of the production process and the types of outputs are considered in determining the most accurate classification.
Issuance
In most cases, ISIC codes are assigned by a national statistical authority. That assignment is typically based on published financial statements, operational disclosures, or validation of the activity a company reports through its registrations and surveys.
Regional use
ISIC functions as a world-level standard. Regions such as the EU and North America base their own systems (NACE and NAICS) on ISIC concepts and structures, aligning with it either directly or through locally adapted versions.
Regulatory application
Although ISIC is not mandated by any global law, many countries incorporate it into their regulatory frameworks. Some, such as Saudi Arabia, require ISIC for specific business activities like foreign investment licensing. Others rely on their ISIC-aligned derivatives, which are mandatory within their respective jurisdictions.
Data vendor adoption
Commercial data providers typically do not publish native ISIC codes in their entity datasets. Instead, they deliver the local or regional classification systems—NAICS, NACE, or country-specific schemes—that align with regulatory requirements and reporting structures.
Standard published
ISIC is maintained by the United Nations Statistics Division (UNSD). The latest release—ISIC Revision 5 (2024)—continues the effort to modernize the structure while preserving global comparability.
Structure
The current version uses a four-level hierarchy: a letter for the Section, two digits for the Division, a third digit for the Group, and a fourth digit for the Class.
Example
B Mining and quarrying
– 07 Mining of metal ores
– 072 Mining of non-ferrous metal ores
– 0721 Mining of uranium and thorium ores
Lifecycle
ISIC dates back to 1948 and has undergone only five major revisions. Changes tend to be significant but slow-moving, and each update takes years to ripple through national systems. While the ISIC code itself may not directly affect most capital markets firms, the downstream impact on the regional frameworks they rely on certainly does.
Takeaway
ISIC often lives behind the scenes, but its influence is anything but invisible. And even if you never file an ISIC code directly, the framework shapes the classification landscape in which you operate. When local systems change, when data vendors revise their schemas, or when regulators update their requirements, those shifts almost always trace back to ISIC. Understanding the standard at the source makes it far easier to anticipate what’s coming next.
