International Accounting Standards Board (IFRS) Chair Erkki Liikanen has presented an overview of the foundation’s work towards developing a “global baseline” of standards for sustainability-related disclosures. IFRS accounting standards are currently required for use by more than 140 countries, and the global body is seeking feedback on proposals to expand its remit to create a new International Sustainability Standards Board that would set international sustainability accounting and reporting standards, starting with climate change.
Speaking yesterday at the CFA Institute’s Global Financial Regulatory Symposium, Liikanen pointed to broad support for a global baseline approach to sustainability-related disclosure from the G7 Finance Ministers, the International Organization of Securities Commissions (IOSCO) and other standard-setting organisations. “There is a path to global sustainability standards if we, on the one hand, can create a global baseline of sustainability-related disclosures to facilitate comparability for investment decision-making and, on the other, work with jurisdictions to ensure compatibility between this global baseline and their own initiatives,” he said.
Emphasising that the IFRS focus on sustainability is market and demand led, Liikanen said that the Task Force on Climate-related Financial Disclosures, the Value Reporting Foundation, the Climate Disclosure Board and other investor-focused standards groups recognise that consolidation among standards is required and are involved in the IFRS initiative. “Our shared ambition is to introduce a global baseline of standards for sustainability-related disclosures which are focused on meeting the information needs of investors globally when assessing enterprise value,” Liikanen said.
Climate and sustainability-related assessment and reporting standards, including climate-related risk disclosure, are the foundation of market-led approaches to climate change mitigation by central banks, financial supervisors and governments. However, climate campaigners, academics and civil society groups have criticised an over-reliance on an exclusively market-led approach, calling instead for a precautionary approach from regulators involving direct climate mitigation policies and actions.
Campaign groups have also called for practical implementation of the concept of double materiality, expanding the conventional understanding of what accounting standards consider ‘material’ to include not only climate-related impacts on the company but also the impacts of a company on the climate.
IFRS activities are overseen by a board of trustees, who are in turn accountable to a monitoring board of public authorities that includes the IOSCO, European Commission, and US Securities and Exchange Commission.
The deadline for submissions to the consultation process on expanding the IFRS remit is July 29th, 2021.
This page was last updated June 30, 2021
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