The drive towards consistency in environmental, social, and governance (ESG) and sustainability reporting took a step forward Wednesday with the formal announcement that the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) are merging to form the Value Reporting Foundation.
Efforts towards corporate reporting of ESG and sustainability measures have been hampered in recent years because a number of organisations produce different standards related to this reporting. This has led to inconsistent expectations and confusion.
“Businesses and investors have long asked for more simplicity and more clarity in the corporate reporting landscape, and our merger is a direct response to this call,” Value Reporting Foundation CEO Janine Guillot said Wednesday during a videoconference with reporters. “By combining the tools, the resources, and the relationships of SASB and IIRC, the merger also better positions us to support key bodies such as the IFRS Foundation and to continue to work with our colleagues around the world to drive toward a more coherent and comprehensive reporting system.”
Guillot said this is a “momentous year” in sustainability reporting because:
- The IFRS Foundation expects to have a decision in the fall on possible plans to create a board that would establish global standards for sustainability reporting.
- The European Commission has taken steps to drive sustainability reporting forward through its Corporate Sustainability Reporting Directive and its sustainability-related financial disclosures regulation.
- The US Securities and Exchange Commission has asked for public comments on potential climate change disclosure requirements.
The Value Reporting Foundation is participating in the technical readiness working group that is informing the IFRS Foundation’s plans for a possible international sustainability standards board. It’s hoped that the work of the Value Reporting Foundation and other like-minded organisations can assist in the work of an international board.
“We believe the IFRS Foundation is uniquely positioned to establish legitimacy around sustainability disclosure standards for the global capital markets just as it did for financial reporting,” Guillot said.
Guillot said the IIRC’s guidance and SASB’s standards are complementary and are used together by many organisations to guide their corporate sustainability reporting. The IIRC’s Integrated Thinking Principles guide business and management decision-making, and its Integrated Reporting Framework provides principles-based guidance addressing six capitals or elements to describe how a report should be structured and what content it should include.
The SASB’s standards are based on five sustainability dimensions and provide industry-specific topics and metrics for use in corporate sustainability reporting.
“By bringing them together into a global organisation, we contribute to clarity and simplicity as well as continuing that momentum that’s needed to transform the entire system,” said Richard Sexton, a co-chair of the Value Reporting Foundation Board.
Guillot said the Value Reporting Foundation will work to fully harmonise the guidance of SASB and the IIRC over time to make it easier for companies and businesses to use both.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is FM magazine’s editorial director.