The International Sustainability Standards Board (ISSB) will develop IFRS Sustainability Disclosure Standards providing a comprehensive global baseline of high-quality sustainability disclosures to meet investors’ information needs. The new board will also bring together the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF), the name behind the Integrated Reporting Framework and the SASB Standards, by June 2022.
The ISSB’s standards will fulfil the growing and urgent demand for streamlining and formalising corporate sustainability disclosures and calls by investors and regulators for the IFRS Foundation to use its experience in creating accounting standards to bring globally comparable reporting on sustainability matters to the financial markets.
The standards will include disclosure requirements that address companies’ impacts on sustainability matters relevant to assessing enterprise value and making investment decisions. The standards will be developed so they can be used alongside any sustainability reporting standards that are jurisdiction-specific or aimed at a wider group of stakeholders such as the European Union’s planned Corporate Sustainability Reporting Directive.
The prototypes for climate-related disclosures and general sustainability disclosures mark the culmination of six months of joint work by representatives of the CDSB, the International Accounting Standards Board (IASB), the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), the VRF and the World Economic Forum (Forum), supported by the International Organization of Securities Commissions (IOSCO) and its Technical Expert Group of securities regulators. The ISSB will consider the prototypes as part of its initial work programme.
Meanwhile, the ISSB will be given technical advice on sustainability matters by a new Sustainability Consultative Committee, whose members will include the International Monetary Fund, the OECD, the United Nations, the World Bank and expert members drawn from public, private and non-governmental organisations.
The IFRS Foundation says recruitment for a Chair and Vice-Chair(s) to the ISSB is well advanced and the search for additional board positions up to a full complement of 14 members will commence shortly. Meanwhile, the ISSB’s main offices will be split between Frankfurt and Montreal, supported by other offices around the world including a London office to provide technical support and platforms for market engagement and deeper cooperation with regional stakeholders.
Commenting on the announcement of the new board Michael Izza, ICAEW Chief Executive, strongly supported its formation and said it addressed the urgent need for a set of global, high-quality and authoritative standards for non-financial reporting on climate and sustainability.
“This is a major step forward for reporting around sustainability and towards the development of a truly international corporate reporting system,” said Izza. “Climate change is one of the biggest challenges humanity has ever faced, and chartered accountants are in the vanguard of solutions to this challenge. We look forward to continuing to work closely with the IFRS Foundation on this very important project.”International sustainability reporting standards
Veronica Poole, Deloitte’s global IFRS leader, said the global ISSB standards are an essential part of a system change that will be required to create a global baseline of sustainability information addressing the needs of global capital markets. “To be effective, the standards will need to be brought into regulation around the world, together with associated enforcement, monitoring, governance and controls, assurance, and training. Worldwide adoption of the ISSB standards is needed to achieve true harmonisation, to replace the alphabet soup of voluntary standards and frameworks.”
Poole continued: “The announcement of the commitment by CDSB and VRF to merge with the new board sends a clear signal to the market that ISSB is emerging as the global sustainability standard-setter. This will reduce fragmentation and confusion in the sustainability standard-setting landscape. Deloitte remains committed to the goal of global sustainability standards and will continue to support the new ISSB with stakeholders around the world.”
Erkki Liikanen, Chair of the IFRS Foundation Trustees, said sustainability, and particularly climate change, is the defining issue of our time. “To properly assess related opportunities and risks, investors require high-quality, transparent and globally comparable sustainability disclosures that are compatible with the financial statements. Establishing the ISSB and building on the innovation and expertise of the CDSB, the Value Reporting Foundation and others will provide the foundations to achieve this goal.”
Mary Schapiro, Head of the TCFD Secretariat, said development of the ISSB’s global baseline would deliver transformative change in sustainability disclosures for the financial markets. “The TCFD welcomes the formation of the ISSB, which builds upon the foundation of the globally accepted TCFD framework and the work of an alliance of sustainability standard setters. The ISSB represents a major step forward in establishing consistent, comparable global reporting standards.”
- Read ICAEW’s comprehensive Q&A explainer on international sustainability reporting standards
- Find out more about the ISSB by watching The IFRS Foundation live broadcast at 14:30 GMT on 3 November, live-streamed at the IFRS Foundation’s website and via its LinkedIn and YouTube channels.
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