The International Financial Reporting Foundation has announced it is to co-ordinate a merger of the Value Reporting Foundation (VRF) – the host organisation of the Sustainability Accounting Standards Board – together with the Climate Disclosure Standards Board (CDSB) to form a new International Sustainability Standards Board (ISSB).

The process is expected to take until June of next year and will result in the formation of a new global sustainability disclosure standards setter, the Foundation said. 

Unveiling the move, IFRS Foundation chair Erkki Liikanen 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.


The new board is poised to hit the ground running with the Foundation also announcing its Technical Readiness Working Group is to publish “prototype climate and general disclosure requirements”.

The Trustees set up the TRWG to lay the groundwork for the possible launch of the ISSB and the new prototypes are the result of collaboration between the CDSB, the International Accounting Standards Board and the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) over the past six months.

The VRF and the World Economic Forum, with backing from the International Organization of Securities Commissions (IOSCO) and its technical expert group of securities regulators, also contributed to the effort.

According to the Foundation, the draft standards draw on technical elements of the six contributors’ technical input.

TCFD secretariat chief Mary Schapiro hailed the new board as a ground-breaking development.

She said: “The TCFD welcomes the formation of the ISSB, which builds upon the foundation of the globally-accepted TCFD framework and the work of an alliance of sustainability standard setters.

“The ISSB represents a major step forward in establishing consistent, comparable global reporting standards.”

The IFRS Foundation announcement comes amid growing pressure from investors for reliable information to enable them to assess individual companies on environmental, social and governance (ESG) metrics.

Many in the ESG space have criticised the current ESG disclosure marketplace as fragmented, leading to higher costs and inefficiencies for investors, regulators and the companies making the disclosures.

The new ISSB’s primary role will be to develop a single suite of IFRS Sustainability Disclosure Standards to improve the quality of companies’ disclosures.

According to the Foundation, the standards will include disclosure requirements that “address companies’ impacts on sustainability matters relevant to assessing enterprise value and making investment decisions”.

The new standards are intended to “facilitate comparability” with “requirements that are jurisdiction-specific or aimed at a wider group of stakeholders” such as the European Union’s planned Corporate Sustainability Reporting Directive and other initiatives worldwide.

“Now investors and companies have the prospect of a single global language for sustainability reporting”


In the Netherlands, €7trn institutional investor group Eumedion said it applauded the Foundation’s decision to establish the ISSB.

“Now investors and companies have the prospect of a single global language for sustainability reporting through standards issued by the ISSB,” it said in a statement. “We expect all stakeholders to benefit from the ISSB’s efforts.”

European asset management trade body Efama said it commended the announcement of a formal mechanism for coordinating with jurisdictions such as the EU, which with its standard-setting body EFRAG could adopt a “more ambitious framework”. 

“In this context, we would also welcome a commitment by the ISSB to widen the IFRS’ approach to materiality in sustainability reporting by including companies’ positive and negative climate impacts on top of how environmental risks impact companies (i.e. ‘double materiality’),” Efama added.

The path to today’s announcement began in 2019 with the IFRS Foundation Trustees’ five-yearly review of their structure and effectiveness. IPE reported that this process had revealed that it was increasingly hard to draw a line between corporate reporting and sustainability.

Then in October 2019, the trustees set up a task force to further research the question, which found that sustainability reporting was one of growing importance and complexity.

These findings in turn prompted the IFRS Trustees to launch a public consultation on the issue in June 2020, with concrete proposals for a sustainability standards board emerging in September of that year.

The Foundation’s efforts got a major boost last May when IOSCO made public its backing for a sustainability reporting framework for public issuers.

Ashley Alder, IOSCO’s chair, today said that if the ISSB’s future standards meet IOSCO’s expectations, “our endorsement will support all our 130 members in considering ways they might adopt, apply or be informed by the standard”.

The decision to set up the ISSB under the auspices of the IFRS Foundation nonetheless marks the end of a more than a decade-long journey for both the International Integrated Reporting Council and the Sustainability Accounting Standards Board (SASB).

Earlier this year, the two bodies announced their merger to form the VRF.

SASB chief executive officer Janine Guillot told IPE in emailed comments that the decision to form the VRF was nonetheless “one of the most significant developments in accounting standards in a generation.”

Guillot said: “It recognises the vital importance of robust, credible, comparable information to enable efficient and resilient capital markets that support sustainable economic growth.”

The ISSB’s work is expected to start as soon as a chair and vice chair(s) have been appointed. According to the Foundation, the new board will begin with public consultations to inform its work plan and on proposals informed by the recommendations of the TRWG.

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