The International Integrated Reporting Council (IIRC) welcomes IOSCO’s statement following its Board meeting of 24 February 2021 which underscores the urgent need for comprehensive globally agreed standards for sustainability disclosure that build on existing principles, frameworks and standards. IOSCO identifies the proposed Sustainability Standards Board (SSB) within the IFRS Foundation’s governance structure as the most suitable home for standards relevant to enterprise value creation and we support this proposal.
The IIRC strongly endorses IOSCO’s view that an initial ‘climate-first approach’ by the SSB should be followed quickly by a broadening of standards development to include wider sustainability topics. In our view a timely roadmap setting out the path to this comprehensive vision would gain widespread market, as well as broader stakeholder, support. It would also be the basis for further critical developments, including facilitating assurance.
We are encouraged by IOSCO’s view that the prototype standard for climate-related financial disclosures developed by the alliance of five global framework and standards organizations (CDP, CDSB, GRI, IIRC and SASB) could be a basis for the SSB developing climate-related reporting standards and we remain committed to working with the IFRS Foundation to provide technical and other support. We welcome the proposal to establish a multi-stakeholder expert consultative committee within the IFRS Foundation to help identify the scope of current and future sustainability disclosure standards, embracing intellectual, human, social and relationship, manufactured and natural capitals.
The IIRC supports the three priority areas identified by the IOSCO Board for further improvement in sustainability-related disclosures, including increased leverage of existing principles, frameworks and standards, and the promotion of comparable metrics and narrative. We would specifically highlight the importance of connectivity in achieving a comprehensive global system and would advocate for the inclusion of a conceptual framework that would drive the integration between financial and sustainability disclosure standards focused on enterprise value creation.
Commenting on IOSCO’s statement, IIRC Chief Executive Officer Charles Tilley OBE, said:
“This important statement from IOSCO identifies the urgent need for standards that are relevant to enterprise value creation and that the proposed SSB is the right home for these standards under the respected governance structure of the IFRS Foundation. It is critical that the system as a whole takes account of all value drivers and we welcome IOSCO’s call for a timely roadmap for the inclusion of broader sustainability disclosure standards, while utilising the prototype climate standard developed by the alliance of global reporting organizations as a starting point.
“I am particularly encouraged that national developments are starting to reflect the incredible progress agreed at an international level and this week’s announcement by the US SEC that it will review the guidance for US public companies on climate-related disclosure is an important example of coordinated and practical action.
“The work to develop a comprehensive corporate reporting system is a collaborative effort and using existing principles, frameworks and standards is the optimal starting point. The proposed IIRC-SASB merger and creation of the Value Reporting Foundation is a further concrete signal that the market is ready to play its full part in the next critical phase to bring about a high-quality global disclosure system, supported by integrated thinking, that meet the needs of capital markets and broader society in the public interest”.