International Financial Reporting Standards

The Trustees of the International Financial Reporting Standards (IFRS) Foundation announced in March 2021 a working group to accelerate convergence in global sustainability reporting standards focused on enterprise value. This is part of the potential creation of a international sustainability reporting standards board under the governance of the IFRS Foundation. The working group will be chaired by the IFRS Foundation and include participation by the International Accounting Standards Board (IASB), and by the International Organization of Securities Commissions (IOSCO) as an observer.

The working group will provide technical recommendations concerning the creation of the proposed new international sustainability reporting standards board that in turn would develop standards for climate-related reporting and other sustainability topics. The working group will review how technical expertise and content could be transitioned under the IFRS Foundation’s governance structure, with the aim of facilitating consolidation and reducing fragmentation in sustainability reporting standards.

Why it matters 

• Outcomes of this working group could support the convergence in sustainability disclosures, which is key for financial institutions to access comparable data.

Main areas of work related to climate mainstreaming:

Details on the exact areas of work related to climate mainstreaming are not yet available.

The Trustees of the International Financial Reporting Standards have reached the following views about the strategic direction of a new board:

• Investor focus for enterprise value: the new board would focus on information that is material to the decisions of investors, lenders and other creditors.
• Sustainability scope, prioritising climate: due to the urgent need for better information about climate-related matters, the new board would initially focus its efforts on climate-related reporting, while also working towards meeting the information needs of investors on other ESG (environmental, social and governance) matters.
• Build on existing frameworks: the new board would build upon the well-established work of the Financial Stability Board’s Task Force on Climate related Financial Disclosures (TCFD), as well as work by the alliance of leading standard-setters in sustainability reporting focused on enterprise value. The Trustees will consider the prototype proposed by the alliance for an approach to climate-related disclosures as a potential basis for the new board to develop climate-related reporting standards.
• Building blocks approach: by working with standard-setters from key jurisdictions, standards issued by the new board would provide a globally consistent and comparable sustainability reporting baseline, while also providing flexibility for coordination on reporting requirements that capture wider sustainability impacts.