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IFRS Foundation ramps up climate commitment

Author: ICAEW Insights

Published: 18 Jun 2021

A concerted build-up of sustainability-related activity by the IFRS Foundation is underlining the standard-setter’s commitment to using its clout to address climate change.

A series of announcements made already this month highlight the growing importance of sustainability-related financial disclosures to the IFRS Foundation, in anticipation of COP26, the UN’s climate change conference due to take place in Glasgow in November.

On 1 June the IFRS Foundation Trustees published a call for nominations for the Chair and Vice-Chair of a proposed new International Sustainability Standards Board (ISSB) within the existing governance structure of the Foundation, as the latest step in their preparation for its possible establishment in advance of COP26. Nominations for the two roles are open until 30 June 2021

At the same time, the IFRS Foundation this month announced the establishment of a new Eminent Person Group, chaired by former President of the European Central Bank Jean-Claude Trichet, to provide strategic advice and counsel to the Trustees in their sustainability-related work. Other members of the group include Sheila Bair, former Chair of the US Federal Deposit Insurance Corporation; Nandan Nilekani, Chair and co-founder of Infosys; and Min Zhu, former Deputy Managing Director of the International Monetary Fund. 

Meanwhile, a communique issued by the G7 Finance Ministers following their meeting on 5 June praised work conducted by the IFRS Foundation to develop the global baseline of sustainability-related financial disclosures, as part of a stated commitment by the G7 to deliver the “significant structural change needed to meet our net zero commitments and environment objectives in a way that is positive for jobs, growth, competitiveness and fairness.” The communique also highlights a commitment to embed climate change and biodiversity-loss considerations into economic and financial decision-making.

“We welcome the International Financial Reporting Standards Foundation’s programme of work to develop this baseline standard under robust governance and public oversight, built from the TCFD framework and the work of sustainability standard-setters, involving them and a wider range of stakeholders closely to foster global best practice and accelerate convergence,” the communique says.

Sarah Dunn, Technical Manager, Financial Reporting Faculty, ICAEW commented: “Support from the G7 Finance Ministers demonstrates the significant momentum and support behind the IFRS Foundation’s sustainability project. There is a clear and urgent need for greater consistency in sustainability reporting.”

Dr Nigel Sleigh-Johnson, Director of ICAEW’s Technical Strategy Accountability Group, added: “We are encouraged by recent developments at the Foundation, which will help to ensure that the ISSB operates within a well-established and robust governance structure, with access to appropriate expertise. Getting the foundations right will be key to the development of high quality and proportionate sustainability reporting standards, and ICAEW stands ready to assist in this important endeavour.”

Further details on the IFRS Foundation’s sustainability project are available on its project page.

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