One possible option is for the IFRS Foundation to establish a new sustainability standards board, operating alongside the IASB, focusing initially on climate-related matters.
The Trustees of the IFRS Foundation have published a consultation paper to assess demand for global sustainability standards and, if demand is strong, assess whether and to what extent the Foundation might contribute to the development of such standards.
The IFRS Foundation was established to develop a single set of globally accepted accounting standards, and is the organisation behind IFRS Standards. The Trustees are responsible for the strategic direction and governance of the Foundation as well as for oversight of the IASB (International Accounting Standards Board), which sets IFRS Standards.
Amid heightened focus on ESG matters, developments in sustainability reporting and increased calls for standardisation of such reporting, the Trustees are now seeking stakeholder input on the need for global sustainability standards and gauging support for the Foundation to play a role in the development of such standards.
The consultation paper sets out possible ways the Foundation might contribute to the development of global sustainability standards by broadening its current remit beyond the development of financial reporting standards and using its experience in international standard-setting, its well-established and supported standard-setting processes and its governance structure.
One possible option outlined in the paper is for the Foundation to establish a new sustainability standards board. The new board could operate alongside the IASB under the same three-tier governance structure, build on existing developments and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters.
The consultation paper sets out critical success factors for the creation of a new board, including achieving sufficient support from public authorities and market participants; working with regional initiatives to achieve global consistency and reduce complexity in the reporting landscape; achieving the appropriate level of funding; and ensuring the current mission of the IFRS Foundation is not compromised.
The consultation, available here, is open for comment until 31 December 2020.
Last month, the IFAC (International Federation of Accountants) called for the creation of a new sustainability standards board that would exist alongside the IASB under the IFRS Foundation.
“IFAC believes the IFRS Foundation, with the backing of public authorities, is optimally positioned to lead and coordinate this initiative, and they would do so with our full support,” said IFAC CEO Kevin Dancey said at the time.
Shortly thereafter, the CDP, CDSB (Climate Disclosure Standards Board), GRI (Global Reporting Initiative), IIRC (International Integrated Reporting Council) and SASB (Sustainability Accounting Standards Board) announced a shared vision of the elements necessary for corporate reporting and a joint statement of intent to drive towards this goal.
The five standard-setters committed to work together and engage with key actors – including IFRS, IOSCO, the European Commission, and the World Economic Forum’s International Business Council – to achieve their shared vision.