Last month at the 2021 United Nations Climate Change Conference (commonly referred to as the COP26), the International Financial Reporting Standards Foundation (IFRS Foundation) announced the formation of an International Sustainability Standards Board (ISSB).
The IFRS Foundation also announced that it had reached an agreement to consolidate with the Climate Disclosure Standards Board (CDSB), an initiative of CDP (formerly the Carbon Disclosure Project), and the Value Reporting Foundation (which resulted from the already merged International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) Foundation).
In light of these developments, the Corporate Reporting Dialogue (CRD), – an initiative convened in 2014 to strengthen cooperation, coordination and alignment amongst key international standard setters and framework developers – dissolved last month. The IIRC formed the CRD as a response to “market calls for better alignment and reduced burden in corporate reporting.” In connection with its dissolution, the CRD cited the success of its mission given the upcoming consolidation of four of its seven members with the formation of ISSB.
By way of background, the CRD made significant progress since it was convened in 2014. Some of its work included a landscape map showing the connections amongst various reporting initiatives through the lens of integrated reporting, and a paper setting out principles of transparency and accountability necessary for all corporate reporting. Its efforts more recently culminated in the “Better Alignment” project that was pivotal in laying the foundation for the recent announcements to consolidate and deliver a comprehensive, aligned system for international reporting. See our blog posts from June 2021 and December 2020 regarding consolidation efforts.
All parties within the dissolving CRD will support the ongoing work by the ISSB. The IFRS Foundation and the ISSB plan to establish an advisory group structure that will allow the continued coordination and collaboration among organizations committed to enhanced, standardized disclosure – an effort previously facilitated by the CRD.
The Staff at the Securities and Exchange Commission (SEC) has been tracking these efforts. Earlier this month, SEC’s Acting Chief Accountant, Paul Munter, issued a statement concerning “High Quality Financial Reporting in a Complex Environment,” in which he highlighted “international developments on th[is] topic,” specifically including the “formation of a global sustainability standards board,” namely the “International Sustainability Standards Board (‘ISSB’) to set IFRS sustainability disclosure standards.” In our July 2021 blog post, we also described how the Staff has previously expressed support and considered the IFRS as the entity that creates global sustainability reporting standards.
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