IFRS Sets Out Strategic Direction for Sustainability Standards Board
The IFRS Foundation Trustees have set out their views on the strategic direction for the new board for setting sustainability reporting standards. Feedback to the 2020 consultation on sustainability reporting confirmed an urgent need for global sustainability reporting standards and support for the Foundation to play a role in the development of these reporting standards. IFRS announced that the Trustees remain on track to make a final determination about a new board in advance of the November 2021 United Nations COP26 conference, including the detailed analysis of feedback on the requirements for success outlined in the sustainability reporting consultation and other conditions to be satisfied prior to that consideration.
Based on feedback received to the 2020 Consultation and encouraged by the IOSCO statement dated February 2021, the Trustees have reached the following views about the strategic direction of a new board:
- The new board would focus on information that is material to the decisions of investors, lenders, and other creditors.
- Due to the urgent need for better information about climate-related matters, the new board would initially focus its efforts on climate-related reporting, while working toward meeting the information needs of investors on other environmental, social, and governance (ESG) matters.
- The new board will build on the well-established work of the FSB Task Force on Climate related Financial Disclosures (TCFD) and 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. To prepare for this work, IFRS Foundation will initiate a process of structured engagement with the relevant organizations.
- By working with standard-setters from key jurisdictions, standards issued by the new board would provide a globally consistent and comparable sustainability reporting baseline, while providing flexibility for coordination on reporting requirements that capture wider sustainability impact.
The Trustees intend to publish a feedback statement that summarizes the responses received to their sustainability reporting consultation and how that feedback informed the above decisions. Together with the feedback statement, the Trustees will publish for public comment the proposed changes to the Foundation’s Constitution necessary to formalize establishment of a new board, including its composition. The Trustees will continue to engage with IFRS Foundation Monitoring Board and be informed of their views to proposed changes. Any changes to the Constitution are subject to a public consultation with a 90-day comment period.
Keywords: International, Banking, Insurance, Securities, Reporting, Climate Change Risk, ESG, COP26, Sustainability Standards Board, TCFD, IOSCO, IFRS
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