I'm not going to use tutors work as my own

INFO

he International Financial Reporting Standards Foundation, which oversees the International Accounting Standards Board, has issued a consultation paper to find out how mu ch demand is out there for it to also oversee international sustainability standards.

The move comes amid increasing demands for a more unified set of sustainability standards. Earlier this month, five international sustainability accounting standard-setters the Carbon Disclosure Project, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Integrated Reporting Council and the Sustainability Accounting Standards Board released a joint statement describing their intention to align their standards and frameworks more closely (see story). Confusion has mounted over the sometimes conflicting sets of standards. International securities regulators are calling for common standards, as investing in environmental, social and governance (ESG) funds has grown in popularity amid increasing concerns about issues such as climate change, diversity, inclusion and labor practices.

In response to the joint statement from the sustainability groups, the International Federation of Accountants and its CEO, Kevin Dancey, proposed that the IFRS Foundation create an International Sustainability Standards Board and oversee it alongside the International Accounting Standards Board. Barry Melancon, president and CEO of the American Institute of CPAs, who also chairs the International Integrated Reporting Council, concurred with the idea.

The performance platform for the modern firm

Firms are facing a new reality in how business is done. Right Networks and Rootworks have aligned front and back-office functions in a powerful...

Sponsor content from Right Networks Rootworks

Also this month, the Big Four accounting firms released their own common set of metrics for ESG reporting, in conjunction with the World Economic Forum (see story).

Partly in response to the proposal from the IFAC and AICPA CEOs, the trustees of the IFRS Foundation released a consultation paper Wednesday to assess the demand for global sustainability standards. If the demand is strong, the IFRS Foundation trustees plan to determine whether and to what extent the foundation might contribute to the development of those standards, while continuing to oversee the IASB.

They pointed to the heightened focus on ESG issues, along with developments in sustainability reporting and increased calls for standardization of ESG reporting. They're looking for stakeholder feedback on the need for global sustainability standards while gauging support for the IFRS Foundation to play a role in the development of such standards.

The consultation paper describes various possible ways the foundation could contribute to the development of global sustainability standards by broadening its current mission beyond the development of financial reporting standards and using its experience in international standard-setting, along with its established standard-setting processes and governance structure. One possible option discussed in the paper is for the foundation to establish a new sustainability standards board. The new board could operate alongside the IASB under the same three-tier governance structure, while building on existing developments and collaborating with other bodies and initiatives in sustainability, focusing initially on climate-related matters.

"Calls for standardization and comparability of reporting on sustainability and climate-change issues continue to grow as these matters become increasingly important to capital markets," said IFRS Foundation trustees chair Erkki Liikanen in a statement. "We therefore seek to assess whether there is demand for global sustainability standards and whether the IFRS Foundation should play a role in developing such standards."

The consultation paper details some of the critical factors needed for creation of a new board, including achieving sufficient support from public authorities and market participants; working with regional initiatives to achieve global consistency and reduce complexity in the reporting landscape; achieving the appropriate level of funding; and ensuring the current mission of the IFRS Foundation isn't compromised. The consultation paper is open for comment until Dec. 31, 2020.

IFAC welcomed the news of the consultation paper on sustainability reporting, saying it marks a critical step on the path toward a global solution to sustainability reporting. It believes the demand is urgent from investors, policymakers and other stakeholders for a sustainability reporting system that delivers consistent, comparable, reliable and assurable information, and said the IFRS Foundation is in the optimal position to establish a new sustainability standards board that leverages the expertise and disclosure requirements of existing leading initiatives. The group also pointed to support in a letter Wednesday from the five sustainability standard-setting groups SASB, IIRC, GRI, CDP and CDSB to Erik Theden, chair of the Sustainable Finance Task Force of the International Organization of Securities Commissions.

"The IFRS Foundation with its backing by public authorities, independence, and globally-respected governance and due process is the appropriate home for a new sustainability standards board," said IFAC CEO Kevin Dancey in a statement. "Today's open letter to IOSCO from the five leading global ESG reporting organizations lends further support to the legitimacy of a new sustainability board and I strongly encourage their continued collaborative effort. Now is the time for professional accounting organizations around the world to lend their expertise and support as the IFRS Foundation trustees consider this important challenge. IFAC looks forward to engaging with our members and other key stakeholders in formulating a full supportive response to the consultation."

Under the IFRS umbrella, the work of this new board could connect with the investor focus of the IASB, said IFAC, while also collaborating on reporting requirements designed to address broader stakeholder interests.

The IFRS Foundation noted that its trustees are required to consult on the foundation's strategy every five years and the consultation paper, which is based on work by a smaller trustee task force, would be part of their current assessment of future strategy. Any changes to the foundation's remit would then be subject to further public consultation. The IFRS Foundation plans to schedule some webinars discussing the consultation paper during the consultation period before the end of the year. Further information will be posted on a project page on the IFRS Foundation website.

question

Summary of the article that includes what you learned while reading this article and a question this article leads you to wonder about or consider