The IFRS Foundation is proposed as the body that is “optimally positioned” to lead and coordinate the creation of a new sustainability standards board.
Five organisations that guide the overwhelming majority of sustainability and integrated reporting have announced a shared vision of the elements necessary for corporate reporting and a joint statement of intent to drive towards this goal.
The five include the CDP, the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB).
GRI, SASB, CDP and CDSB set the frameworks and standards for sustainability disclosure, including climate-related reporting and the TCFD recommendations, while IIRC provides the integrated reporting framework that connects sustainability disclosure to reporting on financial and other capital.
“Transparent measurement and disclosure of sustainability performance is now considered to be a fundamental part of effective business management, and essential for preserving trust in business as a force for good,” the organisations said in a joint statement. “Yet, the complexity surrounding sustainability disclosure has made it difficult to develop the comprehensive solution for corporate reporting that is urgently needed.”
To address this need, the organisations have outlined a shared vision that includes both financial accounting and sustainability disclosure, connected via integrated reporting. Foundational to this is multi-stakeholder standard-setting that will reduce the burden on reporting organisations while facilitating analysis, interpretation and action by users of information.
The standard-setters have committed to work together and engage with key actors – including IOSCO and the IFRS, the European Commission, and the World Economic Forum’s International Business Council – to achieve their shared vision. IOSCO recently announced a plan to harmonise sustainability disclosure standards from across the world in order to make it easier to compare information.
Acknowledging the importance of structured information to enable comparison, the standard-setters emphasise the importance of data being structured around agreed taxonomies and being democratised via a public data platform.
“We know that businesses globally are already using a mixture of our frameworks and standards to provide stakeholders with robust, effective information to drive better decision-making and capital allocation via their integrated report,” said Charles Tilley, CEO of the IIRC. “This document provides further clarity on how to do this effectively.”
The joint statement, available here, calls for feedback, engagement with the standard-setters on all parts of the reporting eco-system, and active support and help to achieve and evolve the shared vision.
The announcement followed a call from the International Federation of Accountants (IFAC) for the creation of a new sustainability standards board that would exist alongside the IASB under the IFRS Foundation.
The proposed board would address the demand from investors, policymakers and regulators for a reporting system that delivers “consistent, comparable, reliable, and assurable information relevant to enterprise value creation, sustainable development and evolving stakeholder expectations,” IFAC said in a statement.
“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. “We recommend that the proposed board adopt a ‘building blocks’ approach, working with and leveraging the expertise and disclosure requirements of the CDP, CDSB, GRI, IIRC and SASB.”
IFAC’s overview of the objectives, structure and building blocks of the proposed board can be found here.