IFRS Consults on Global Approach to Sustainability Reporting
IFRS launched a consultation to assess the demand for global sustainability standards. If demand is found to be strong, the aim is also to assess whether and to what extent IFRS might contribute to the development of such standards. The consultation paper sets out possible ways through which IFRS might contribute to the development of global sustainability standards by broadening its remit beyond the development of financial reporting standards and using its experience in international standard-setting. One possible option outlined in the paper is for IFRS to establish a new Sustainability Standards Board. The consultation is open for comments until December 31, 2020.
Out of the possible options set out in the consultation paper, IFRS considers that the best option would be to create a Sustainability Standards Board and become a standard-setter working with existing initiatives and building on them. Such an action by the IFRS Foundation could lead to an approach that seeks to harmonize and streamline sustainability reporting, which could benefit stakeholders of the IFRS Foundation and benefit sustainability reporting. The consultation paper also sets out critical success factors for the creation of a new board, including achieving sufficient support from public authorities and market participants, working with regional initiatives to achieve global consistency and reduce complexity in the reporting landscape, achieving the appropriate level of funding, and ensuring that the current mission of the IFRS is not compromised.
The objective of Sustainability Standards Board would be to develop and maintain a global set of sustainability reporting standards, initially focused on climate-related risks. Such standard-setting would make use of existing sustainability frameworks and standards. The new board could leverage and adapt the standard-setting process, due process procedures, and network of IFRS. The board could promote the consistent use and application of the new sustainability reporting standards and contribute to international collaboration, cooperation, and coordination among sustainability reporting bodies, governments, regulators, and other stakeholders to achieve further convergence. The new board could operate alongside IASB under the same three-tier governance structure, build on existing developments, and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters. The proposed establishment of the Sustainability Standards Board within the institutional and governance structure of the IFRS Foundation could achieve the objectives of developing a framework for sustainability reporting that is coherent with, and connected to, financial reporting.
Comment Due Date: December 31, 2020
Keywords: International, Banking, Securities, Insurance, ESG, Sustainability Standards Board, Reporting, Climate Change Risk, IFRS, IASB
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous Article
FSC Korea Issues Update on Loan Deferment Program Amid PandemicRelated Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.