On November 3, 2021 at COP26 in Glasgow, the International Financial Reporting Standards (IFRS) Foundation Trustees announced the formation of the International Sustainability Standards Board (ISSB).
This announcement is a commitment to consolidate the leading investor-focused sustainability disclosure organisations into the ISSB, and the publication of prototype climate and general disclosure requirements developed by the Technical Readiness Working Group, which was formed by the Trustees to undertake preparatory work for the ISSB.
Commenting on the announcement London Business School’s Professor Lucrezia Reichlin, a trustee of the Foundation and chair of the steering committee of the project, said: “This is a real game changer. All major sustainability private standard setters are consolidating to form the international sustainability standard board under the umbrella of the IFRS. This will be a powerful organisation, which combines the experience and credibility of the IFRS on financial reporting with that of those organisations that pioneered the idea that accounting needs to reflect risks and opportunities linked to the transition to net zero and physical risks related to climate. The transition needs public and private capital, but to mobilise private capital we need reporting rules that can provide transparent and comparable information on enterprise value. We also need them to be mandatory and auditable. This is the new plumbing needed for a sustainable financial system. I am very proud of what we have achieved.”.
The ISSB will combine with the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF) by June 2022.
“To properly assess related opportunities and risks, investors require high-quality, transparent and globally comparable sustainability disclosures that are compatible with the financial statements,” said Erkki Liikanen, chair of the IFRS Foundation Trustees.
“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.”.
The Trustees are at advanced stages in appointing a Chair and Vice-Chair(s) to the ISSB. The Trustees will commence shortly a search for the additional board positions, up to the full complement of 14 members.
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 and on proposals informed by recommendations from the TRWG. 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 finalisation as standards. The entire process will be overseen by the Trustees’ Due Process Oversight Committee.
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.”