Financial markets need sound information about sustainability related risks and proposed new International Sustainability Standards will help this process, according to Erkki Liikanen, the chair of the IFRS Foundation Trustees.
The IFRS Foundation has spent much of 2021 putting the new standard setting into place and Liikanen addressed the environmental conference COP26 in Glasgow to formally launch the concept on the world stage.
Liikanen told COP26 that more than 20 years ago, global regulators and other stakeholders urged the creation of a single set of accounting standards and that has led to the adoption of international accounting standards by more than 140 countries including Australia.
The sustainability standard setter is the next cab off the rank, Liikanen said, and it is being created to align with the demands of the same groups that wanted one set of accounting standards for the globe.
“The ISSB will focus on meeting the sustainability information needs of investors for assessing enterprise value and making investment decisions. Its standards will help investors understand how companies are responding to ESG issues, like climate, to inform capital allocation decisions,” Liikanen said.
“The standards will form a comprehensive global baseline of sustainability disclosures. They can be used on a standalone basis or integrated into jurisdictional requirements to serve broader stakeholder or other public policy needs.
“The global baseline approach provides investors with the high-quality global comparability they need, while jurisdictions incorporating the global baseline can go further if they wish. with similar global demands for better and more uniform guidance on sustainability reporting.”