Stockholm (NordSIP) – A common complaint among institutional investment professionals is the proliferation of different sustainability reporting standards. Operating globally means adapting to local regulators’ requirements and the resulting administrative burden can be quite heavy. Sustainability is a worthy goal but there are only so many hours in the working day. It is therefore good news to hear from the International Financial Reporting Standards Foundation (IFRS) of their efforts to build an integrated reporting framework, based on existing sustainability and financial accounting standards.
Having already stated its intention to incorporate the Sustainability Accounting Standards Board (SASB) standards earlier this year, the IFRS announced on May 25, 2022 its plans for the consolidation of the Value Reporting Foundation’s (VRF) Integrated Reporting Framework, in collaboration with the International Accounting Standards Board (IASB) and International Sustainability Standards Board (ISSB).
In a first step, the Integrated Reporting Framework will become part of the IFRS Foundation’s core materials. The IASB and ISSB will use the framework’s principles and concepts in their respective standard setting work. The development teams will seek to align their previous work as far as possible with the VRF’s concepts and address any remaining discrepancies. The longer-term plan is for the IASB and ISSB to take joint and full responsibility for the Integrated Reporting Framework.
As part of the consolidation project, the IFRS Foundation will work on engaging with market participants to encourage the use of the VRF’s Integrated Thinking Principles and help organisations prepare for the transition to new reporting practices under the auspices of the ISSB and IASB.
It is encouraging to see these international standard setting bodies actively working towards consolidating not only ESG-related reporting frameworks but also traditional financial accounting tools. This can be seen as another step towards a world where sustainability is ingrained within all business practices and no longer needs to stand alone. More information on the Integrated Reporting Framework can be obtained form the IFRS Foundation.