Explain what motivates corporations to report on sustainability matters according to the Task Force on Climate-related Financial Disclosure (TCFD) guidelines

Relative to" The demand for better disclosure of sustainability information is urgent.

Many stakeholders acknowledged that delays to global coherence, most pressingly on climate-related disclosures, will increase the threat of fragmentation and consequently cause difficulties in engaging capital markets to smooth the transition to a low-carbon economy.

Explain what motivates corporations to report on sustainability matters according to the Task Force on Climate-related Financial Disclosure (TCFD) guidelines

16 Demand for better disclosure of sustainability information is urgent. Many stakeholders acknowledged that delays to global coherence, most pressingly on climate-related disclosures. will increase the threat of fragmentation and consequently cause difficulties in engaging capital markets to smooth the transition to a low-carbon economy. Many jurisdictions have committed to target dates to achieve net-zero emissions and reporting standards could play a vital role in assisting with these targets. What can the IFRS Foundation contribute? 17 There have been several recent calls for the IFRS Foundation to become involved in reducing the level of complexity and achieving greater consistency in sustainability reporting." Such calls suggest that the IFRS Foundation's track record and expertise in standard-setting, and its relationships with global regulators and governments around the world, could be useful for setting sustainability reporting standards. 18 The IFRS Foundation's mission is to develop IFRS Standards that seek to bring transparency. accountability and efficiency to financial markets around the world. The work serves the public interest by fostering trust, growth and long-term financial stability in the global economy. The IFRS Foundation has existing standard-setting expertise and due process procedures focused on transparency, broad consultation and accountability that, as some have suggested, could be deployed to reduce complexity and achieve greater consistency in global sustainability reporting. 19 The IFRS Foundation maintains strong and collaborative international relationships with governments, regulators and national standard-setters to deliver its mission. The Foundation works closely with such stakeholders in connection with the Foundation's standard-setting. implementation support and maintenance activities. In many instances those relationships are formalised through memorandums of understanding. Such established relationships assist in the consistent use of IFRS Standards for all or most domestic publicly accountable entities (listed companies and financial institutions) in 144 jurisdictions around the world." 20 The IFRS Foundation's standard-setting body, the International Accounting Standards Board (LASB). is also a member of the Corporate Reporting Dialogue (CRD)." which strives to strengthen cooperation, coordination and alignment among standard-setters and framework developers that have significant international influence in corporate reporting. The CRD also involves some standard-setters that focus on sustainability reporting- 21 The Foundation's current relationships could help to achieve further global consistency and reduce complexity in sustainability reporting. as some stakeholders suggest. Such work would require the support of, and a close institutional relationship with governments, regulators and national standard-setters.16 Demand for better disclosure of sustainability information is urgent. Many stakeholders acknowledged that delays to global coherence, most pressingly on climate-related disclosures. will increase the threat of fragmentation and consequently cause difficulties in engaging capital markets to smooth the transition to a low-carbon economy. Many jurisdictions have committed to target dates to achieve net-zero emissions and reporting standards could play a vital role in assisting with these targets. What can the IFRS Foundation contribute? 17 There have been several recent calls for the IFRS Foundation to become involved in reducing the level of complexity and achieving greater consistency in sustainability reporting." Such calls suggest that the IFRS Foundation's track record and expertise in standard-setting, and its relationships with global regulators and governments around the world, could be useful for setting sustainability reporting standards. 18 The IFRS Foundation's mission is to develop IFRS Standards that seek to bring transparency. accountability and efficiency to financial markets around the world. The work serves the public interest by fostering trust, growth and long-term financial stability in the global economy. The IFRS Foundation has existing standard-setting expertise and due process procedures focused on transparency, broad consultation and accountability that, as some have suggested, could be deployed to reduce complexity and achieve greater consistency in global sustainability reporting. 19 The IFRS Foundation maintains strong and collaborative international relationships with governments, regulators and national standard-setters to deliver its mission. The Foundation works closely with such stakeholders in connection with the Foundation's standard-setting. implementation support and maintenance activities. In many instances those relationships are formalised through memorandums of understanding. Such established relationships assist in the consistent use of IFRS Standards for all or most domestic publicly accountable entities (listed companies and financial institutions) in 144 jurisdictions around the world." 20 The IFRS Foundation's standard-setting body, the International Accounting Standards Board (LASB). is also a member of the Corporate Reporting Dialogue (CRD)." which strives to strengthen cooperation, coordination and alignment among standard-setters and framework developers that have significant international influence in corporate reporting. The CRD also involves some standard-setters that focus on sustainability reporting- 21 The Foundation's current relationships could help to achieve further global consistency and reduce complexity in sustainability reporting. as some stakeholders suggest. Such work would require the support of, and a close institutional relationship with governments, regulators and national standard-setters.Part 2: High-level options for the IFRS Foundation 22 The Trustees considered different options for how the IFRS Foundation could approach sustainability reporting while understanding the growing calls for the urgent need for further consistency in reporting and comparable information. The Trustees' consideration on the strategic direction of the Foundation in this area ultimately focused on 'change or no change'. and the following options were considered: (a) Maintain the status quo-the Trustees considered that maintaining the Foundation's current structure would not enable it to significantly reduce the complexity and improve comparability in sustainability reporting. Such an approach would carry the lowest risk of failure for the Foundation, but would provide the least benefit to the Foundation's stakeholders and other parties interested in achieving global comparability and a reduction of complexity in global sustainability reporting. Such an approach would not respond to several stakeholders' calls for the Foundation to take a leading role in global sustainability reporting. (b) Facilitate existing initiatives-the Trustees considered that the Foundation could attempt to facilitate and harmonise existing initiatives, which could assist in reducing complexity. But this approach also carries an equal risk of causing fragmentation and adding to the complexity-by adding another voice to the discussion, rather than creating a global framework for consistent standard-setting. (c) Create a Sustainability Standards Board and become a standard-setter working with existing initiatives and building upon their work-subject to consultation to understand whether demand is sufficient to create such a standard-setting body (see the section, Requirements for Success). this option is considered the best of those discussed to assist in reducing complexity and achieving comparability in sustainability reporting. The IFRS Foundation action could lead to an approach that seeks to harmonise and streamline sustainability reporting, which could benefit stakeholders of the IFRS Foundation and benefit sustainability reporting. Part 3: A new Sustainability Standards Board 23 To achieve coherence and comparability. the approach recommended by the Task Force and supported by the Trustees would be to create a new Sustainability Standards Board (SSB) under the governance structure of the IFRS Foundation to develop global sustainability standards. The Trustees' approval of such an initiative is conditional on the satisfaction of the requirements for success (see paragraph 31). 24 The objective of the SSB would be to develop and maintain a global set of sustainability-reporting standards initially focused on climate-related risks. Such standard-setting would make use of existing sustainability frameworks and standards (for more information on the proposals for building upon existing initiatives and a 'climate-first approach' see paragraphs 41-43). 25 The proposed establishment of the SSB within the institutional and governance structure of the IFRS Foundation could achieve the objectives of developing a framework for sustainability reporting which is coherent with and connected to financial reporting and the LASB's own mission to serve investors and other primary users of financial statements