Supports Sustainability Standards Board Under IFRS
Adding momentum to the movement towards global sustainability corporate reporting standards, global accountancy profession organization the International Federation of Accountants (IFAC) announced today the publication of its roadmap for delivering a global system for sustainability reporting.
IFAC’s recommendations come as the International Financial Reporting Standards Foundation (IFRS) is exploring the development global sustainability standards for company reporting, and the establishment of an IFRS Sustainability Standards Board (ISSB). Earlier this week, the IFRS launched a proposal to amend its constitution to encompass the development of sustainability standards within its objectives. IFAC stated that it supports a new standard-setting board under the IFRS Foundation that can lead to the coordination and harmonization of reporting and provide a baseline of requirements addressing sustainability information that is material to enterprise value.
The IFAC roadmap promotes reporting that focuses both on investors as well as on companies’ broader stakeholder impact, through a “building blocks” approach targeting each group. The investor focused aspect includes identifying sustainability factors that are material to short-, medium-, and long-term enterprise value, including qualitative information about governanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights., strategy and risk management. Investor-focused reporting would revolve around standards set by an IFRS Sustainability Standards Board.
Multi-stakeholder reporting aims to capture the impacts of the company on the broader economy, environment, and people other than investors. Standards in this area could include those from sustainability reporting initiatives such as GRI.
IFAC CEO Kevin Dancey said:
“As the IFRS Foundation continues to consider establishing a new International Sustainability Standards Board and as jurisdiction-specific initiatives progress, IFAC is lending its voice to clarify how components can best fit together to meet the needs of all stakeholders. The IFRS initiative—as well as jurisdiction-specific initiatives—should build on what already exists, help create or contribute to a global system, and accommodate different views of what information stakeholders require. The building blocks approach makes this possible.”
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