IFRS Foundation consults on approach to sustainability reporting
This article highlights the recently issued consultation from the IFRS Foundation Trustees on a global approach to sustainability reporting
The Trustees of the IFRS Foundation have published a Consultation Paper to assess demand for global sustainability standards and, if demand is strong, assess whether and to what extent the Foundation might contribute to the development of such standards.
The IFRS Foundation was established to develop a single set of globally accepted accounting standards. It is the organisation behind IFRS Standards - financial reporting standards required for use by more than 140 jurisdictions. The Trustees are responsible for the strategic direction and governance of the Foundation as well as for oversight of the International Accounting Standards Board, which sets IFRS Standards.
Amid heightened focus on environmental, social and governance (ESG) matters, developments in sustainability reporting and increased calls for standardisation of such reporting, the Trustees are now seeking stakeholder input on the need for global sustainability standards and gauging support for the Foundation to play a role in the development of such standards.
The Consultation Paper sets out possible ways the Foundation might contribute to the development of global sustainability standards by broadening its current remit beyond the development of financial reporting standards and using its experience in international standard-setting, its well-established and supported standard-setting processes and its governance structure.
One possible option outlined in the paper is for the Foundation to establish a new sustainability standards board. The new board could operate alongside the International Accounting Standards Board under the same three-tier governance structure, build on existing developments and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters. This suggestion is aligned with the roadmap published in September by the International Federation of Accountants (IFAC) Enhancing Corporate Reporting: The Way Forward and is an important first step towards a solution for global sustainability reporting.
In September, five of the leading non-financial reporting frameworks issued a statement of intent committing them to work together towards the vision of a more comprehensive reporting system. One would hope that these bodies will be represented on any future sustainability standards board in recognition that their existing frameworks, standards and platforms are already well established and implemented.
The Consultation Paper sets out critical success factors for the creation of a new board, including achieving sufficient support from public authorities and market participants; working with regional initiatives to achieve global consistency and reduce complexity in the reporting landscape; achieving the appropriate level of funding; and ensuring the current mission of the IFRS Foundation is not compromised.
The consultation is open for comment until 31 December 2020.