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Steps towards establishing an International Sustainability Standards Board

The IFRS Foundation Trustees have outlined the strategic direction for a new international sustainability standards board. The new board’s remit would address the chorus of demand for value-relevant sustainability information that is both comparable and reliable.

Strategic direction for the new board

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

Having established an enterprise value focus, the Trustees have recognised the body of existing sustainability reporting frameworks that share a similar goal which they can build on. This includes the work of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) and the alliance1 of leading standard setters in sustainability reporting.

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.

Changes to the IFRS Foundation constitution

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.

What’s next?

The IFRS Foundation plans to publish a feedback statement on their 2020 Consultation along with the proposed changes to its constitution necessary to formally establish a new board, including its composition. This could lead to the announcement of a new board in advance of the November 2021 United Nations Climate Change Conference (COP 26) in Glasgow. Further announcements are expected in the run up to this.


1 The CDP, CDSB, GRI, IIRC and SASB (see their paper Reporting on Enterprise Value)