Expanding the scope of financial reporting
Work being undertaken by the IFRS Foundation
In the October 2020 edition of Accounting Alert we provided information on the Consultation Paper on Sustainability Reporting (“the Consultation Paper”) that had been published by the Trustees of the IFRS Foundation (“the Trustees”). The Consultation Paper:
Set out the views of the Trustees on how the IFRS Foundation could contribute to the development of consistent, global requirements for sustainability reporting
- Proposed the creation of a sustainability standards board to fall within the governance structure of the IFRS Foundation and sit alongside the International Accounting Standards Board
- Sought public feedback on a series of questions regarding the Trustees’ proposals.
The IFRS Foundation received 576 comment letters on the Consultation Paper.
On 1 February 2021, the Trustees met to review responses to the first three questions posed in the Consultation Paper – the level of demand for global sustainability standards, whether the IFRS Foundation should play a role in the development of such standards, and, if the IFRS Foundation should play a role in the development of such standards, the requirements for success in doing so. The Trustees noted that the responses received to these questions “indicate growing and urgent demand to improve the global consistency and comparability in sustainability reporting, as well as strong recognition that urgent steps need to be taken and broad demand for the IFRS Foundation to play a role in this”.
Given this demand, the Trustees decided to:
- Undertake further detailed analysis of feedback on the requirements for success and other conditions to be satisfied prior to consideration of whether to establish the proposed sustainability standards board
- Form a Trustee Steering Committee to oversee the next phases of work
- Add an additional key requirement for success – that being the need for urgency to deliver global standards, most notably on climate.
The Trustees also laid out their intention to produce a definitive proposal (including a road map with timeline) by the end of September 2021, which they stated could possibly lead to an announcement on the establishment of a sustainability standards board at the United Nations Climate Change Conference in November 2021.
The broader context
The Trustees’ considerations do not sit in a vacuum – there is currently substantial, and increasing, interest in sustainability reporting and, more broadly, in what is often referred to as “extended external reporting”. The term “extended external reporting” refers to the provision of broader and more detailed types of reporting than the historical financial information captured in general purpose financial statements and includes, among other things, reporting of an entity’s environmental, social and cultural impacts.
In future editions of Accounting Alert, we’ll examine various aspects of the complex and fast moving world of extended external reporting.
For more information on the above, please contact your local BDO representative.
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