The International Financial Reporting Standards Foundation (IFRS) announced today its views towards the strategic direction to be taken in the formation of a new sustainability reporting standards board, including its focus, scope, and approach.
In October 2020, the IFRS initiated a three-month consultation, launched with the release of a paper seeking feedback on the potential formation of global sustainability reporting standards, and its own place in that process.
The new initiative follows the announcement earlier this year that the IFRS plans take the next steps towards the establishment of the reporting standards, possibly leading to an announcement on the establishment of a sustainability standards board at the meeting of the United Nations Climate Change Conference COP26 in November 2021.
Last month, the International Organization of Securities Commissions (IOSCO), the leading international policy forum for securities regulators, announced that it will work with IFRS Foundation Trustees towards the establishment of a Sustainability Standards Board (SSB), citing an “urgent need for globally consistent, comparable, and reliable sustainability disclosure standards.”
Based on the feedback from its consultation, and the IOSCO endorsement, the IFRS has unveiled details regarding the strategic direction of the new board. According to the IFRS, the new board would focus on information that is material to the decisions of investors, lenders and other creditors. Citing the urgent need for better information about climate-related matters, the IFRS said that new board would initially focus its efforts on climate-related reporting, while also working towards meeting the information needs of investors on other ESG matters. The board would build on established, existing frameworks, such as TCFD, as well as work by the alliance of leading standard-setters in sustainability reporting focused on enterprise value. Additionally, the IFRS said that the board will take a building-blocks approach, working with standard-setters from key jurisdictions, issuing standards to provide a globally consistent and comparable sustainability reporting baseline, while also providing flexibility for coordination on reporting requirements that capture wider sustainability impacts.