The IFRS Foundation trustees have reached some conclusions related to a board that may be created under their governance structure to set international global sustainability reporting standards.
Based on feedback to a 2020 consultation, the trustees announced Monday that they have reached the following views about the strategic direction of a new board:
- It would be investor-focused. The board would focus on information that is material to the decisions of investors, lenders, and other creditors.
- Sustainability and climate would be prioritised. The trustees cited the urgent need for better information about climate-related matters in stating that the new board would initially focus its efforts on climate-related reporting, while also working toward meeting the information needs of investors on other environmental, social, and governance (ESG) matters.
- It would build on existing frameworks. The new board would build on the work of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) as well as work by the alliance of leading standard-setters in sustainability reporting focused on enterprise value. The trustees will consider the prototype proposed by the alliance for an approach to climate-related disclosures as a potential basis for the new board to develop climate-related reporting standards. The IFRS Foundation will prepare for this work by initiating a process of structured engagement with the members of the relevant organisations.
- It would use a building-blocks approach. Through work with standard-setters from key jurisdictions, the new board would seek to issue standards that would provide a globally consistent and comparable sustainability reporting baseline, while also providing flexibility for coordination on reporting requirements that capture wider sustainability impacts.
The trustees are planning to produce a definitive proposal on creating a new international global sustainability reporting standards board, including a road map with a timeline, by the end of September.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.