After meeting March 2-4, 2021, the International Financial Reporting Standards (IFRS) Foundation’s trustees have announced plans to continue the IFRS Foundation’s endeavor of establishing an international sustainability reporting standards board within the current administration of the foundation. The decision was based on the encouragement received in comments concerning the Consultation Paper on Sustainability Reporting, which was published in 2020. Also, in February 2021, the International Organization of Securities Commissions (IOSCO) has indicated its intention to work with the IFRS Foundation to develop a plan to establish a new board to set sustainability standards that will meet the needs of the capital markets.
The IFRS Foundation trustees recognize the importance of reporting standards that address enterprise value, which captures expected value creation for investors in the short, medium and long term and is interdependent with value creation for society and the environment. Therefore, the strategic direction of the new board will be:
Focus on information that is material to investors, lenders and other creditors
Place initial emphasis on climate-related reporting, while still working towards other ESG matters
Build on existing frameworks, such as the Task Force on Climate Related Financial Disclosures (TCFD) and the work of the alliance of leading standard-setters in sustainability reporting
Take a building block approach to provide a globally consistent and comparable reporting baseline with flexibility for other sustainability impacts
The trustees will publish a feedback statement summarizing the responses received to the 2020 Consultation Paper on Sustainability Reporting and explain the ways in which feedback led to the aforementioned direction. The proposed changes to the IFRS Foundation’s Constitution necessary to establish this new board will also be published for public review and comment.
A final determination about the new board will be made before the November 2021 United Nations COP26 conference. This included taking into account a detailed analysis of feedback on the requirements for success outlined in the 2020 Consultation Paper on Sustainability Reporting, as well as other conditions that should be satisfied prior to that consideration.
The IFRS Foundation is a not-for-profit international organization responsible for developing a single set of high-quality global accounting standards, known as IFRS Standards.