The International Financial Reporting Standards (IFRS) Foundation has announced significant developments with regards to sustainability and ESG all while the Climate Change Conference, COP26, is taking place in Glasgow.
Firstly, the organisation has announced the establishment of a new International Sustainability Standards Board (ISSB), which will provide a comprehensive global foundation of high-quality sustainability and ESG disclosure standards to meet the information needs of investors.
Second, the IFRS Foundation will complete the consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (which emerged in June this year as an integration of the IIRC and SASB) by June 2022. And, as a third step, the publication of prototype climate and general disclosure requirements developed by the TRWG (Technical Readiness Working Group), a group formed by the trustees of the IFRS Foundation to carry out preparatory work for the ISSB.
The ISSB sustainability disclosure standards will address the ESG impact of companies by providing comprehensive information to the global financial markets to assist investment decisions. The ISSB advisory group will include the World Bank, IMF, OECD and the UN, among others. It’ll also be a separate body from the IASB (International Accounting Standards Board), although they’ll work together to ensure compatibility between IFRS and ISSB standards.
These novelties represent an accounting milestone and demonstrate the genuine commitment of international markets to find solutions aligned with sustainability and the generation of value for our society and the planet, increasingly placing ESG criteria at the heart of management.
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