SASB and IIRC merger to create Value Reporting Foundation

The Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) have confirmed that they are working on plans to merge the bodies with the creation of the Value Reporting Foundation

The merger is designed to simplify the reporting requirements for listed companies and reduce the current complexity of operating multiple systems.

‘Over the last 18 months we have said that we are very much committed to simplify the integrated disclosure field,’ said Janine Guillot, CEO of SASB, addressing delegates at a webinar on the plans. ‘We want to focus on reporting as a means to improve decision making by companies and investors. The merger will lead to better integrated thinking.

‘It is very exciting to think about the range of tools in one place and we want to accelerate towards a comprehensive reporting framework.’

The merger of the two standard setters is currently at the negotiation stage and part of the work involves benchmarking the current standards so that they can align into a single reporting structure with Guillot confirming that ‘the merger will close the first week of June and we will continue to more closely align the integrated reporting and FASB concepts over time, while working with the IFRS Foundation to establish global sustainability standards’.

‘The Value Reporting Foundation will have a single governing body and one team, bringing together the integrated thinking principles, the integrated reporting framework and the SASB standards,’ said Guillot. ‘We are also committed to support the introduction of global sustainability standards under the oversight of the IFRS Foundation.’

At the moment there is a level of crossover between SASB standards and the IIRC framework.

Charles Tilley, CEO of IIRC, said: ‘The international IR framework establishes the guiding principles that underpin the SASB standards. SASB has developed 77 industry standards that identify a minimum set of sustainability metrics, which enable comparability of similar companies across industries.

‘The merger is a major stepping stone towards comprehensive, connected holistic reporting. We are currently mapping the IIRC capitals to SASB dimensions. In the future SASB standards will evolve over time and the plan is to create a common architecture for reporting by merging IIRC and SASB.’

The alignment of standards is designed to reduce the current complexity for companies using the various different reporting frameworks.

‘One of the things we want to do is to harmonise the top level structure so that the way the integrated reporting framework around capitals and SASB standards work together and are more aligned to have a common, top down framework,’ added Tilley. ‘As an interim step we have mapped the SASB standards to four of the six integrated reporting capitals, covering intellectual, social and relationship, human and natural capital.’

The merger plans were welcomed by institutions reporting under the current framework.

Alex Broedel Lopes, group CFO of Brazilian financial institution Itau Unibanco, said: ‘The issue of sustainability is not only important for investors but from a customer perspective. The integrated reporting framework was very important in terms of putting structure to our reporting so we could produce a single integrated report including financial statements.

‘The SASB standards fit very well on the IR framework and the merger is a major improvement in terms of perspective and to be able to provide comparable data.

‘In terms of the finance function, financial professionals have to evolve and adapt significantly from what we have been taught and how we trained. We also have the challenge related to people, the challenge of recruiting people in the future.’

From an investor perspective, simplifying the reporting framework will be beneficial.

‘We are very excited about the merger and it feels like a very rational evolution. If simplicity allows comparability then that makes sense,’ said Leon Kamhi, executive director of Federated Hermes International.

The Croner-i Navigate Energy and carbon reporting quick link sets out guidance, commentary, tools and resources on climate change reporting.

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