Unifying sustainability reporting Unifying sustainability reporting Unifying sustainability reporting

The IFRS Foundation Trustees have previously outlined the strategic direction for a new International Sustainability Standards Board (ISSB) and the publication of the proposed change to its constitution is the latest step towards its creation. The ISSB’s remit would be to address the demand for sustainability information that is relevant to enterprise value creation and is globally consistent, comparable and reliable.

The ambition remains to announce the creation of the new board in advance of the United Nations Climate Change Conference (COP 26) in Glasgow in November 2021.

The Trustees are focusing on four key strategic areas.


Investor focus for enterprise value

The Trustees intend to focus on enterprise value, placing the emphasis firmly on those sustainability factors that drive companies’ short-, medium- and long-term prospects, and the information the capital markets need to assess them. The emphasis on investor decision making provides a clarity of focus that is key for high quality standard-setting, while recognising that companies’ prospects also depend on value created for society and the environment.

Sustainability scope, prioritising climate

The new board would initially focus on climate related information while also working towards meeting the information needs of investors on other ESG matters, recognising the calls for urgent action in this area. This pragmatic approach acknowledges investors’ wider need for information on other sustainability topics.

Build on existing frameworks

The Trustees have formed a technical readiness working group to build on existing initiatives focused on enterprise value reporting. This group will also coordinate efforts to develop consistent global sustainability reporting standards under the governance of the IFRS Foundation. The group will include participation from the International Accounting Standards Board (IASB), reflecting the importance of connectivity with financial reporting.

Other participants will include the FSB Task Force on Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation³, the Climate Disclosure Standards Board (CDSB) and the World Economic Forum (WEF). The working group will closely engage with the Global Reporting Initiative (GRI) and CDP.

This working group will assess how technical expertise and content could transition to the ISSB.

Building blocks approach

The Trustees are seeking to provide a global foundation for consistent and comparable sustainability reporting. They recognise that additional or different information may be required to meet other reporting objectives. A ‘building blocks’ approach would enable jurisdictions to layer local requirements onto the global baseline. The Trustees are forming a multilateral working group with IOSCO and other relevant organisations to create a multi-stakeholder expert consultative committee. This committee would support the new board’s engagement with international and jurisdictional initiatives, as well as stakeholders with different target audiences.

The Trustees propose to amend the constitution to enable the creation of the ISSB. The new board would sit alongside the IASB Board to set IFRS sustainability standards. Its structure and operation would reflect that of the IASB Board, with 14 members providing mixed professional and regional representation.

As the Foundation will maintain its focus on meeting capital markets needs, no changes are proposed to the Foundation’s Monitoring Board or the composition of its Trustees.

The IFRS Foundation seeks input on the proposed changes to the constitution by 29 July 2021 in order to make a final determination to create the ISSB. Read the exposure draft and make your views known.