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
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 ArticleEIOPA Sets Out Work Priorities for 2021-2023
Next ArticleOSFI Updates Timelines for Implementation of IFRS 17
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.