IFRS Foundation - Consultation on Sustainability Reporting

ACCA welcomes the opportunity to provide views in response to the IFRS Foundation’s consultation paper on sustainability reporting. This has been done with the assistance of members of ACCA’s Global Forum for Corporate Reporting. If further information is needed, please get back to us.

ACCA strongly supports the IFRS Foundation’s proposal to create a global sustainability standards board. A consistent and global set of standards is needed to enable regulators to address the scale of global environmental and social challenges today, accelerate the necessary reallocation of capital, and drive positive changes in corporate decision-making. We firmly believe that the IFRS Foundation is the organisation that is best suited to achieve this, thanks to its governance structure, robust due processes and its strong relationships with regulators and capital markets across the world.

Sustainability reporting standards should aim not only to provide decision-useful information to investors, but importantly, should also drive changes in corporate behaviour in support of positive social and environmental outcomes. In this context, we agree that climate-related financial disclosures is the area where standard-setting action is likely to be most urgently needed. Looking further forward, though, we believe that the SSB should broaden its standard-setting remit to cover wider social and environmental topics. This is needed to ensure that the interests of stakeholders other than investors are addressed. At the same time, a broader scope would align better with the scope of key existing initiatives (<IR> Framework, GRI, SASB, and the proposed EU non-financial reporting standards).

Before setting standards on climate-related risks, it would be beneficial to have a conceptual framework upon which the standards can be developed on a coherent basis. Besides a conceptual framework for sustainability reporting, the IFRS Foundation may also wish to consider developing a conceptual framework for corporate reporting as a whole, thus strengthening the link between financial and non-financial reporting. The groundwork has already been laid for such an overarching conceptual framework: the Conceptual Framework for Financial Reporting, the soon-to-be-revised Practice Statement on Management Commentary, and the <IR> Framework provide consistent principles on which this can be built.

Coordination with existing and planned regional and jurisdictional initiatives will be important. Key among these are the proposed EU non-financial reporting standards, the timing of which could affect the adoption of the SSB’s standards. Besides this, there are a multitude of mandatory ESG reporting requirements1 around the world. Greater visibility over these existing and planned reporting requirements will be needed to inform the SSB’s work. IOSCO could perhaps facilitate a ‘stock-take’ of climate-related reporting requirements, for example. More jurisdictional reporting requirements are likely to emerge at greater pace, so it will be key for the SSB to engage with regulators at an early stage, to ensure that future mandatory reporting requirements are consistent not only with the proposed conceptual framework for sustainability reporting, but also with a coherent conceptual framework for corporate reporting.

Close collaboration with existing initiatives will also be a determinant for success. Clear synergies exist between the proposed SSB and initiatives such as the IIRC, SASB, GRI, CDSB, CDP, the World Economic Forum and TCFD in terms of the resources, funding and governance processes. As the IIRC and SASB announce their merger, the scene is set for much closer collaboration between voluntary sustainability standard-setters. The IFRS Foundation should seek to build directly upon the harmonisation work that has already started, rather than progressing in parallel with it. Greater clarity over the timescales for the creation of the SSB would be a helpful start in enabling key stakeholders to coalesce in support of the global standards.

To read the full reponse, please see the consultation response document.