The effort to establish a global baseline for sustainability disclosures took another step forward Monday with the consolidation of the Value Reporting Foundation (VRF) into the IFRS Foundation.
The VRF, formed in 2021 by the consolidation of the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC), will assist the International Sustainability Standards Board (ISSB) in its quest to become the global standard-setter for environmental, social, and governance (ESG) reporting. The IFRS Foundation launched the ISSB last year.
The IFRS Foundation is also the home of the International Accounting Standards Board (IASB), a global standard-setter for financial reporting. The IFRS Foundation's goal is to leverage the ISSB and IASB to create a global baseline of sustainability disclosure, connected to financial statements.
Earlier this month, the VRF celebrated a decade-plus of progress made by the IIRC and the SASB during a virtual event moderated by VRF CEO Janine Guillot.
"As part of the IFRS Foundation, we'll support the new International Sustainability Standards Board and continue to drive connectivity between sustainability disclosure and financial statements," Guillot said. "Over the last decade, it's been our goal to help create a system for sustainability disclosure and integrated reporting that has the commensurate level of maturity, credibility, and acceptance as financial accounting. Thanks to the collective effort of many, many people … we are nearing this vision."
The virtual event featured a panel of pivotal stakeholders involved in the sustainability disclosure initiative. Guillot asked each panellist to share their hopes for the next ten years of sustainability reporting.
Here's a sampling of what they said:
"Failure is not an option. A lot of stakeholders have worked hard together to collaborate to get to where we are today, but this is the end of the beginning. There's a long road ahead. So it's going to take commitment. It's going to take collaboration amongst global stakeholders. It's going to take collaboration amongst global standard-setters in jurisdictions to make sure this happens as effectively and efficiently as possible." — Kevin Dancey, CEO, International Federation of Accountants.
"[I hope investors can] be informed by consistent, comparable, and verified sustainability information on both environmental and social issues. But in the end, what I also hope … with all that better reporting is that the sustainability issues by the companies will be better managed and that they will use the ISSB standards to really demonstrate their progress." — Carine Smith Ihenacho, chief governance and compliance officer, Norges Bank Investment Management.
"We're asking our companies to think about a broader range of stakeholder interests, and I think the best way to get to that larger view in disclosure is to use the ISSB as a global baseline and then build on that rather than building a fragmented approach. I urge the broader set of stakeholders to really see the potential for the ISSB's standards to provide a global baseline. Jurisdictions that do actually pull off racing ahead on impact-related metrics, that if they can build on ISSB, it's the fastest path to having those adopted in other jurisdictions." — Ilmi Granoff, former senior director, ClimateWorks Foundation.
"A lot can happen in ten years … just continuing to see a harmonisation between the various standard-setting organisations, frameworks — not just because it will make my job a little bit easier but because new things will crop up inevitably. … Time is moving very quickly these days, and ensuring that the content of the ISSB standards and frameworks reflect all of those changes is going to be really important." — Marvin Smith, director ESG Reporting & Disclosure, Gap Inc.
"Looking forward ten years and thinking back ten years, I think we need to understand that the capital markets are not the be-all and end-all of corporate transparency. And that when we look at transparency, we establish that impacts rather than outcomes are the underlying principle of corporate reporting — and transformed global mandatory reporting to that end. There's a lot of conversation in those statements, but let's sort it out with the GRI [Global Reporting Initiative], and let's have the IFRS Foundation as the foundation of all corporate reporting. And let's save this planet." — Paul Druckman, chairman, World Benchmarking Alliance.
— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.