Position paper calling for a global standard-setter for non-financial reporting

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Jul 06, 2020

On July 6, 2020, the Eumedion Foundation has published a position paper 'Towards a global, investor focused standard setter for corporate non-financial reporting' calling on the IFRS Foundation to establish such a standard-setter.

Eumedion is a non-profit organization based in the Netherlands that monitors listed companies in the Nether­lands and in Europe on their ESG-per­for­mance and looks at risk man­age­ment, re­mu­ner­a­tion, trans­parency and reporting. Eumedion operates as a rep­re­sen­ta­tive of the interests of in­sti­tu­tional investors in the field of corporate gov­er­nance and sus­tain­abil­ity.

The position paper published concludes the final views of Eumedion, following the pub­li­ca­tion of Eumedion’s Green paper in October 2019, the feedback received during the Eumedion Con­fer­ence 2019, the formal and informal responses received and the insights shared during the round table that Eumedion organized together with Ac­coun­tancy Europe on March 9, 2020.

Key messages of the position paper are:

  • Investors struggle to un­der­stand how a company creates long-term value and how a company lives up to the valid needs of society where non-fi­nan­cial per­for­mance matters.
  • There is a need for an International Non-fi­nan­cial reporting Standards Board (‘INSB’) to ensure that en­force­able and con­sis­tent in­vestor-rel­e­vant non-fi­nan­cial in­for­ma­tion is faith­fully reported.
  • Eumedion calls on the IFRS Foun­da­tion to establish the INSB, as a second separate board next to the International Accounting Standards Board (IASB).
  • External auditors should provide at least limited assurance on the in­for­ma­tion reported; this would enhance the re­li­a­bil­ity of corporate non-fi­nan­cial reporting.

The position paper states that the EU needs to be credited for its important role in ac­cel­er­at­ing the adoption of IFRSs to the current near-global level and expresses the belief that the EU could play a similar role for international non-fi­nan­cial reporting standards. Eumedion also urges the EU to adhere to its lead­er­ship role in the field of non-fi­nan­cial reporting. However, the paper quotes ESMA Chair Steven Maijoor in warning that: “It would not only be short-sighted but also detrimental for investors – who typically operate in global financial markets – to build a set of corporate ESG disclosure standards that is only regional.”

Please click to access the full position paper on the Eumedion website.

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