The IFRS Foundation is one step closer to formally adding yet another acronym for business leaders, senior managers and others to remember with the release of its proposed constitutional amendments that seek to add sustainability reporting to its remit.
Amendments to the constitution were released for comment last Friday and have a 29 July 2021 deadline for responses.
Sustainability reporting has grown in importance over the past decade and a decision by global regulators over the past two months to back the establishment of a new body of sustainability reporting standards has seen the project head into hyperspeed.
The IFRS Foundation’s proposed amendments set out the scope of work for the new board, the qualifications of board members sitting on a board dealing with reporting that will have an eclectic focus by its very nature, and what changes are not required.
One process that will not be immediately established, for example, is an interpretations committee for sustainability reporting, even though a financial reporting equivalent exists.
The rationale for this is that the use of the standards needs to be given time to mature before an interpretations body is deemed necessary.
Key elements of the work of the new body, that will be known as the International Sustainability Standards Board (ISSB) will involve ensuring steps are taken to establish a single set of global sustainability standards that uses the work of existing groups as a base.
Work in this area of disclosure has previously been done by groups such as the Global Reporting Initiative, the Sustainability Accounting Standards Board, and the International Integrated Reporting Council.
The IFRS Foundation’s new board would take the work of these entities and look at the best way of ensuring that a single reporting framework for this area of non-financial disclosure is sound.
Climate change reporting issues have been tagged as a priority, consistent with the fact that the Biden Administration in the United States is seeking greater progress within America and across the globe on climate change policy.
The standards to be set by the new board will have an “investor focus for enterprise value”, according to the IFRS Foundation.
Any information that appears in these reports will have to be material to decisions that people investing in entities and other stakeholders make about companies.