By Leigh Roberts
The Value Reporting Foundation (VRF) was formed in July 2021 through the merger of the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB). On 3 November 2021 it announced that it will be consolidated into the new International Sustainability Standards Board (ISSB) together with the Climate Disclosure Standards Board (CDSB). It’s a life too short to mourn.
Importantly let’s talk to are the developments in international corporate reporting. Who said reporting was boring!
The new ‘kingpin’ player is undoubtedly the ISSB. It’s IFRS Sustainability Disclosure Standards could potentially be enforced in 130 jurisdictions around the world (each country will have to mandate their use). This is definitely taking sustainability reporting mainstream and putting it right alongside financial reporting.
Well, actually, to be technically correct, let’s call rather it sustainability-related financial reporting. Because while the first exposure draft on climate is likely to be released in Q1 next year, it’s still unclear as to the extent of the new standards – that is, will they cover the inward impacts of sustainability matters on the organisation, to the extent they affect investors decision-making, plus the impact of the organisation on society and the environment? It’s the great materiality debate and the inward/outlook focus.
The IFRS Foundation does make some encouraging statements in its media release announcing the changes today, 3 November 2021. It says: “It is expected that there will be a great deal of overlap between information needs of investors and broader stakeholder groups on sustainability matters. However, there focus of the ISSB will be on meeting investors’ needs, as the Foundation’s remit and expertise is to set standards that provide information for the capital markets.”
So what do preparers do in the midst of the changes? My suggestion is to carry on using the existing frameworks and guidelines. And we’ll keep you updated on how the international corporate reporting developments align with integrated reporting in South Africa.