More Alignment
And in additional moves, the IFRS Foundation and GRI will align capital market and multi-stakeholder standards to create an interconnected approach for sustainability disclosures.
Under a collaboration agreement through their respective standard-setting boards, the International Sustainability Standards Board (ISSB) and the Global Sustainability Standards Board (GSSB), will seek to coordinate their work programmes and standard-setting activities.
The IFRS Foundation, which announced at COP26 the establishment of the ISSB to develop a comprehensive global baseline of investor-focused sustainability disclosures for the capital markets, and GRI, the leading global standard-setter for multi-stakeholder focused sustainability reporting, further announced that they will join each other’s consultative bodies related to sustainability reporting activities.
That’s all quite a mouthful, but it all adds up to a big shift in standardisation and reporting globally. By working together, the IFRS Foundation and GRI provide two ‘pillars’ of international sustainability reporting; a first pillar representing investor-focused capital market standards of IFRS Sustainability Disclosure Standards developed by the ISSB, and a second pillar of GRI sustainability reporting requirements set by the GSSB, compatible with the first, designed to meet multi-stakeholder needs.
Erkki Liikanen, Chair of the IFRS Foundation Trustees, said: “At COP26 we heard strong support for consolidation in the sustainability reporting landscape. The work of the ISSB and its global baseline concept will help deliver this objective for the capital markets, whilst this agreement with GRI will help ensure capital market standards are developed in a way that minimises reporting burden for those companies also using GRI Standards.”
Eelco van der Enden, Chief Executive Officer of GRI, said: “The MoU between GRI and the IFRS Foundation is a strong signal to capital markets and society that a comprehensive reporting system, which combines financial and impact materiality for sustainability reporting, is possible on a global scale.
“Aligning GRI’s established and widely adopted standards for sustainability impacts with the investor-focused standards being developed by the ISSB will benefit both companies and investors, as well as a wide range of stakeholders around the world.”
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Further Commentary
Emmanuel Faber, Chair of the ISSB, said: “For those interested in considering impact when assessing enterprise value, using the standards set by the ISSB and GSSB together will offer a complete and compatible suite of sustainability disclosures. This agreement will see the two standard-setting boards cooperate in pursuit of that objective.”
And Judy Kuszewski, Chair of the GRI GSSB, comments that the collaboration between the GSSB and the ISSB demonstrates shared commitment to the global alignment of disclosure requirements. “This is crucial if we are to enable consistent reporting by companies, which increases accountability and drives responsible business practices. We look forward to aligning work programs and to making the two-pillar corporate reporting system a reality, with financial and sustainability reporting on an equal footing.”
There’s no doubt the multiplicity of agencies acting in this space can make the landscape confusing, and this isn’t a simple area within which corporates can know the best approaches.
What’s vital is probably less the detail; more the sense that disclosure and standards on sustainability are in the ascendancy. They’re not going anywhere, in fact, they are going to drive corporate and investor practice more fundamentally than ever before.
That’s a message corporates would do well to take on board.