The trustees of the IFRS Foundation has announced the formation of a working group to accelerate convergence in global sustainability reporting standards and to undertake technical preparation for a potential international sustainability reporting standards board
The working group will provide a forum for structured engagement with initiatives focused on enterprise value reporting. This follows a recent statement by the International Organization of Securities Commissions (IOSCO), calling for the coordination of work to drive international consistency of sustainability-related disclosures with a focus on enterprise value creation.
The working group will be headed up by Clara , who will take partial leave from the Impact Management Project (IMP) to be the project lead for the IFRS Foundation’s sustainability project. This is complementary to her role as a facilitator for standard-setting organisations looking to achieve global convergence on sustainability reporting.
Specifically, the working group will provide technical recommendations, including further development of the prototype built on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, as a potential basis for the new board to build on existing initiatives and develop standards for climate-related reporting and other sustainability topics.
Sustainability reporting standards issued by the new board will provide a global sustainability reporting baseline that would allows for greater comparability and consistency of application of the standards, while also providing flexibility for coordination on additional jurisdictional and multi-stakeholder reporting requirements (a 'building blocks' approach).
The group will also review how technical expertise and content might potentially be transitioned to the new board under the IFRS Foundation’s governance structure, with a view to facilitating consolidation and reducing fragmentation in sustainability reporting standards.
The working group will be chaired by the IFRS Foundation and include participation by the International Accounting Standards Board (IASB), given the need for connectivity with financial reporting. IOSCO will participate in the group as an observer. During this preparatory phase, the working group also welcomes engagement with jurisdictions that are working on sustainability reporting.
The Value Reporting Foundation brings international standard-setting experience. It represents the intended merger of the International Integrated Reporting Council (IIRC), which provides a framework for integrated reporting that connects financial and sustainability information, and the Sustainability Accounting Standards Board (SASB), which provides industry-specific standards for reporting on enterprise value.
These initiatives will be supported by the Climate Disclosure Standards Board (CDSB), whose framework guides disclosure of material information for investors through the integration of climate, wider environmental and social-related information into financial reporting.
Finally, the World Economic Forum (WEF) will contribute their work on cross-industry metrics and disclosures that CEOs of a wide range of the world’s largest multinational companies have found to be important for disclosure. Throughout this process, the working group will also engage closely with the Global Reporting Initiative (GRI) and CDP.
The first meeting of the working group is expected to take place in April 2021, with updates on progress published on the IFRS Foundation website.