In September 2020, the International Financial Reporting Standards (IFRS) Foundation released a consultation paper on sustainability reporting. Prior to releasing this report, a Task Force was set up at the initiative of the Trustees of the IFRS Foundation (Trustees) in October 2019 (IFRS, 2020a). This task force sought to identify the demand from stakeholders in the area of sustainability reporting and understand what the IFRS Foundation could do in response to that demand (IFRS, 2020a). Through engagement with stakeholders, the Task Force identified that sustainability reporting is continuing to increase in importance for these stakeholders who believe that there is an urgent need to improve the consistency and comparability in sustainability reporting through a set of comparable and consistent standards (IFRS, 2020a).

In order to achieve greater coherence and comparability in sustainability reporting, one approach recommended by the Task Force and supported by the IFRS Trustees would be to create a new Sustainability Standards Board (SSB) whose objective would be to develop and maintain a global set of sustainability-reporting standards initially focused on climate-related risks (IFRS, 2020a). If an SSB were to be established, it could adopt a ‘climate-first’ approach as the task force’s research and informal consultation indicates that developing global sustainability-reporting standards for climate-related information is the most pressing concern (IFRS, 2020a). Therefore, any initial work to be undertaken by the SSB would focus on climate-related information (IFRS, 2020a). In addition, when considering the concept of materiality, IFRS (2020a) believes that it is important to determine the objectives of sustainability reporting, what information is needed to achieve those objectives and which stakeholders will use the information reported by companies. In addition, given that the IASB has developed a conceptual framework that sets out the underlying concepts for financial reporting and guides the development of IFRS Standards, IFRS (2020a) believes that the SSB could develop a conceptual framework of its own to guide its work on consistent and comparable sustainability reporting Refer to the document “Chairman’s Report IFRS Advisory Council November 2020” and the joint response by the Australian Government Financial Reporting Council (FRC), the Australian Government Australian Accounting Standards Board (AASB) and the Australian Government Auditing and Assurance Standards Board (AUASB) and answer the following: a. Why do the IFRS advisory council, the FRC, AASB and AUASB support the need for a global set of internationally recognised sustainability reporting standards and what do they believe is the role that the IFRS foundation can play in setting standards through a sustainability standards board (SSB)? b. Identify and explain the key factors that would underpin the consistent application of SSB standards and how can global consistency in sustainability reporting as well as global support for the SSB be achieved? c. Why does the IFRS advisory council believe that a “climate first” approach should be adopted and explain and discuss the AASB, FRC and AUASB support for a climate first approach.

Refer to the document “Chairman’s Report IFRS Advisory Council November 2020” and the joint response by the Australian Government Financial Reporting Council (FRC), the Australian Government Australian Accounting Standards Board (AASB) and the Australian Government Auditing and Assurance Standards Board (AUASB) and answer the following: 

a. Why do the IFRS advisory council, the FRC, AASB and AUASB support the need for a global set of internationally recognised sustainability reporting standards and what do they believe is the role that the IFRS foundation can play in setting standards through a sustainability standards board (SSB)? 

b. Identify and explain the key factors that would underpin the consistent application of SSB standards and how can global consistency in sustainability reporting as well as global support for the SSB be achieved? 

c. Why does the IFRS advisory council believe that a “climate first” approach should be adopted and explain and discuss the AASB, FRC and AUASB support for a climate first approach.