At the same time as the climate conference in Glasgow, the IFRS Foundation announced the establishment of its International Sustainability Standards Board (ISSB). Under the aegis of the foundation, international standards for sustainability reporting will be developed in the future. This is designed to meet investors’ needs for information on ESG issues. The board will be based in Frankfurt am Main and will start its work at the beginning of 2022.

Comparable sustainability reporting is intended

The aim of the IFRS Foundation is to place reporting on sustainability aspects on equal footing with reporting on financial aspects. The aim is to achieve globally consistent, comparable and reliable sustainability reporting using a building-block concept. This allows companies in the different countries to supplement the global standards with regionally applicable regulations and provisions.

The ISSB will work closely with the International Accounting Standards Board (IASB), which develops the IFRS accounting standards. This is to ensure that the accounting and ISSB standards are compatible with each other. The ISSB and IASB will be independent. Their standards will complement each other to provide investors with comprehensive information.

It will be left to the individual countries to decide whether they will adopt the new standards. Some countries are likely to adopt them quickly. The UK has already expressed its expectation that the ISSB will become a key part of its sustainability reporting requirements. However, in other countries, such as the EU and the US, the path to adoption is less clear. The foundation’s aim is to provide a global foundation for investor-focused sustainability disclosure standards on which individual countries can build.

Sustainability standards can now be developed quickly

The launch of the ISSB means that sustainability standards can now be developed quickly. It is now important for companies to plan for the potentially rapid implementation of the standards for the disclosure of sustainability data.

KPMG has supported this important initiative through its work on Stakeholder Capitalism Metrics with the World Economic Forum, among other things. With the announcement that the ISSB would be launched, the IFRS Foundation also presented prototypes developed by a working group. They include climate-related information and general disclosure obligations regarding sustainability. The ISSB will consider these prototypes in its work programme. The climate-related disclosure standard is expected to be the first in a series of proposed sustainability disclosure standards issued by the ISSB.

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