Marking a new step in towards the integration of ESG and financial reporting, the International Financial Reporting Standards Foundations (IFRS), and the chairs of the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) announced today plans for the incorporation of the Integrated Reporting Framework into its standard setting projects and requirements, as part of the consolidation of the Value Reporting Foundation.
As part of the plans, the IFRS Foundation, which oversees the IASB and ISSB, will actively encourage the continued adoption of the Integrated Reporting Framework by preparers, driving a connection between sustainability-related disclosures and financial reporting, and will advocate the use of Integrated Thinking Principles, aimed at helping to embed sustainable business practices into organizations.
The International Integrated Reporting Council (IIRC) was established as a global coalition of regulators, investors, companies, standard setters, the accounting profession, academia and NGOs with a mission to establish integrated reporting and thinking within mainstream business practice as the norm in the public and private sectors. The IIRC developed the Integrated Reporting <IR> Framework, a set of guiding principles and content elements to govern integrated corporate reporting. The IIRC also promotes an “Integrated Thinking” approach by organizations to drive an improved understanding of how value is created, to enhance decision-making and actions by boards and management through thinking holistically about the resources and relationships the organization uses or affects, and the dependencies and trade-offs between them as value is created.
In 2021 the IIRC merged with the Sustainability Accounting Standards Board (SASB) to launch the Value Reporting Foundation, which subsequently announced its own consolidation into the IFRS Foundation at the launch of the ISSB.
Under the new plans, the IASB and ISSB chairs announced a commitment to a long-term role for a corporate reporting framework, providing companies with guidance on the preparation of an integrated report, and supporting connectivity between IASB and ISSB reporting requirements, enabling connected, holistic and cohesive corporate reporting.
Andreas Barckow, Chair of the IASB, and Emmanuel Faber, Chair of the ISSB, said:
“We are convinced that the Integrated Reporting Framework drives high-quality corporate reporting and connectivity between financial statements and sustainability-related financial disclosures which improves the quality of information provided to investors. Therefore, we strongly encourage continued use of the Integrated Reporting Framework and the Integrated Thinking Principles underpinning it.”