The IFRS Foundation’s International Sustainability Standards Board (ISSB) will be releasing the finalized versions for the first global standards for sustainability and climate-related reporting in June of this year, according to IFRS Chair Erkki Liikanen.
Speaking on a panel on “Stewarding Responsible Capitalism” at the WEF Forum in Davos, Liikanen revealed the goal, and commented on the speed with which the standards have been developed:
“The aim is very concretely that they would be able to publish, adopt and issue the finalized standard by mid this year, which means in June.
“And it’s tremendous speed. I’ve been working with standardization, and normally two issues never meet: speed and standardization. But this time because there is such an urgency – we have the Paris Agreement, we have a lot of pressure from the markets, from NGOs – everybody feels that we must move forward.”
The ISSB was officially launched in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, in order to provide a global baseline of disclosure requirements that can be used by jurisdictions on a standalone basis or incorporated into broader reporting frameworks. The board released the first exposure drafts for its first two reporting standards, covering general requirements for sustainability-related financial information and climate-related disclosures in March 2022.
Liikanen pointed out that the release of the standard is only the first step in establishing a globally consistent and transparent reporting system, with a need to ensure widespread endorsement and adoption by regulators. Liikanen said that the IFRS has been working closely with IOSCO, the leading standards setter for securities regulators, and expects the organization’s endorsement “relatively soon.”
Following adoption, the next step would be to establish assurance for auditors to assure that companies are following the standards.
In terms of next steps for the ISSB, Liikanen said that following the release of the initial standards this year, the board will consult on a series of issues, including reporting on biodiversity, human capital and human rights, as well on the connectivity of financial reporting with sustainability reporting.
Asked by panel moderator and CNBC Co-Anchor Karen Tso for key takeaways for business leaders for this year, Liikanen said that companies should prepare now to begin reporting on sustainability issues in the near future:
“Jean-Paul Servais, who is the chair of IOSCO… said that the aim should be that in 2024, financial reporting and sustainability reporting will go together. And that’s a good point to keep in mind.
“If you are a business leader, be ready to report on both in 2024.”
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