By Denise Lugo
The IFRS Foundation is pressing the point that its proposed new Sustainability Standards Board (SSB) would not compete with other organizations already developing sustainability reporting but would collaborate with them to develop cohesive globalized reporting requirements.
Trustee member Teresa Ko, in an October 9, 2020, speech, said the foundation is seeking a role to harmonize, standardize, consolidate “the proliferation of metrics, frameworks and disclosure requirements that exists today.”
Ko pointed to the history of the foundation as a measure for its ability to play the role in pulling together global standards in reporting matters on sustainability and climate change.
“Today, the IFRS Foundation remains an independent non-profit organization that continues to develop a single set of high quality, understandable, enforceable and globally accepted IFRS Standards,” said Ko at the inaugural meeting of the Green and Sustainable Finance Cross-Agency Steering Group. “In the last 10 years, the IFRS Foundation also enhanced the quality of IFRS Standards by introducing major updates to the accounting for financial instruments, revenue recognition, leasing and insurance contracts. To date, over 140 jurisdictions require the use of IFRS Standards by all or most publicly-listed companies, and a further 12 jurisdictions permit their use,” she said.
Ko said the foundation’s trustees are aware of the enormity of the task of developing a global set of sustainability standards, and are very clear that building on and working with regional initiatives is a ‘must’ in order to achieve global consistency and reduce complexity and hopefully cost. “Establishing a new Sustainability Standard Board will also be subject to a number of other conditions, including support for separate and adequate funding and appropriate technical expertise for the Trustees, the new sustainability board members as well as the staff needed to support them,” she said.
The IFRS Foundation dates back to 1973 when eight accounting bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom, Ireland, and the United States joined forces to create the International Accounting Standards Committee (IASC) and agreed to adopt International Accounting Standards (IAS) for cross-border stock market listings.
In 1993, the chairman of IASC urged International Organization of Securities Commissions (IOSCO) to accept IAS in multinational securities offerings and foreign listings. This happened in 2000 when IASC restructured itself into a full-time IASB, which acted as an independent standard-setting body overseen by independent trustees who were accountable to the monitoring boards of securities regulators and public authorities around the world. It is a three-tiered governance structure that still exist today.
The IFRS Foundation on September 30 issued a consultation document to solicit public feedback on whether to establish the SSB as a new global standard-setting body under its governance structure. The SSB would initially focus on standardizing reporting rules on climate-related matters, the organization said. (See IFRS Foundation Publishes Consultation Document to Establish Global Sustainability Standards Board in the October 1, 2020, edition of Accounting & Compliance Alert.)
Ko said on the day the consultation document was published, five environmental, social, and governance (ESG) standard setters – the International Integrated Reporting Council (IIRC), Carbon Disclosure Project (CDP), Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), and Sustainability Accounting Standards Board (SASB) – responded by sending a letter to Erik Thedéen, Sweden’s financial regulator and chair of the IOSCO’s Sustainable Finance Task Force, expressing commitment to work closely with IOSCO and IFRS Foundation to achieve the comprehensive corporate reporting system that the world so urgently needs. “Specifically, it mentions that IFRS Foundation could provide an appropriate governance architecture to achieve global acceptance,” she said.
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