What the Latest IFRS Foundation Developments Mean for Your Company

At the COP26 Summit on November 3^rd, the International Financial Reporting Standards (IFRS) Foundation announced three significant developments to provide the global financial markets with high-quality disclosures on climate and other sustainability issues:

1. The formation of a new International Sustainability Standards Board (ISSB) to develop—in the public interest—a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs

1. Consolidation of the Climate Disclosure Standards Board (CDSB, an initiative of CDP) and the Value Reporting Foundation (VRF, which houses the Integrated Reporting Framework and the SASB Standards) by June 2022
2. The publication of prototype climate and general disclosure requirements.

So, what do these developments mean for your organization and the future of sustainability reporting? We answer those questions below, along with how WatchWire can assist your organization with its sustainability disclosure efforts.

What Do the IFRS Developments Mean?

The IFRS Foundation believes the developments create the necessary institutional arrangements and lay the technical groundwork for a global sustainability standard-setter for the financial markets. In addition, they fulfill the growing and urgent demand for streamlining and formalizing corporate sustainability disclosures. The IFRS developments will:

• Create a comprehensive global baseline for reporting
• Consolidate and build on existing initiatives

Why Are These Developments Important?

Financial markets need to assess the risks and opportunities facing individual companies which arise from environmental, social and governance (ESG) issues, as these affect enterprise value. This is driving significant demand for high-quality emissions and sustainability data. Investors and other providers of capital want global sustainability disclosure standards that meet their information needs. Voluntary reporting frameworks and guidance have prompted innovation and action, but fragmentation has also increased cost and complexity for investors, companies and regulators. The IFRS developments will make the reporting and disclosure process simpler and more streamlined, benefitting your organization, stakeholders, and the environment.

Erkki Liikanen, Chair of the IFRS Foundation Trustees, said:

“Sustainability, and particularly climate change, is the defining issue of our time. To properly assess related opportunities and risks, investors require high-quality, transparent and globally comparable sustainability disclosures that are compatible with the financial statements. Establishing the ISSB and building on the innovation and expertise of the CDSB, the Value Reporting Foundation and others will provide the foundations to achieve this goal.”

Next Steps

The ISSB’s work is expected to commence as soon as the Chair and Vice-Chair(s) have been appointed and to begin with public consultations to inform the ISSB’s work plan. Following these consultations, the ISSB’s work will follow the IFRS Foundation’s rigorous due process, including public discussions by the ISSB of feedback received to the consultations and possible improvements to the proposals prior to their finalization as standards. The entire process will be overseen by the Trustees’ Due Process Oversight Committee.

While you wait for the developments to come to fruition, you can prepare your organization for sustainability disclosure and reporting by ensuring you have accurate and comprehensive emissions and ESG data to provide.

WatchWire can help you gather, process, and report this data. Our energy and sustainability management software can help streamline, automate, and standardize your sustainability reporting process. The platform stores, validates, and analyzes all energy, water, waste, and emissions data, providing a single source of truth for your organization’s ESG data.  With multiple integrations to LEED Arc, GRESB, SASB, ENERGY STAR, and more, standardizing your sustainability reporting process is possible.  WatchWire also provides real-time data monitoring, so you can see how well your sustainability measures are working and provide the most recent energy and emissions data to your investors.

To learn more about WatchWire, check out the WatchWire Fact Sheet. Or, if you want to discover more about increasing setting a net zero goal for your company, browse through our e-Book, “Utilizing Sustainability Reporting in the Journey Towards Net Zero.”