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Recent Developments with respect to Sustainability Reporting [Research]

Last up­dated:

April 2021


What is “sustainability reporting”?

Sustainability reporting generally encompasses more than merely disclosure of environmental issues that affect entities, such as climate change and carbon emissions. For example, the Sustainability Accounting Standards Board, one of the world’s leading organizations in this area, states that “sustainability refers to corporate activities that maintain or enhance the ability of the company to create value over the long term. 

Sustainability accounting, thus, reflects the management of a corporation’s environmental and social impacts arising from production of goods and services, as well as its management of the environmental and social capitals necessary to create long-term value. It also includes the impacts that sustainability challenges have on innovation, business models, and corporate governance and vice versa.”   The SASB, therefore, considers that environmental, social and governance (ESG) factors are all relevant to sustainability reporting.  

Or­ga­ni­za­tions that have pro­moted the need for sus­tain­abil­ity re­port­ing in re­cent years in­clude:

Sustainability reporting is not yet mandatory for entities listed on global stock exchanges. Instead voluntary sustainability reporting is being promoted by a variety of organizations, including the four listed above.

In the future there may be a single set of such standards generally accepted on a global basis which may become mandatory on global stock exchanges. Currently, the most widely used voluntary standards are those of the Global Reporting Initiative. However, the recent issue in November 2018 of industry-specific sustainability accounting standards by the Sustainability Accounting Standards Board (which has integrated its standards into the Form 10-K which must be filed by public companies with the U.S. Securities and Exchange Commission) may result in a significant increase in entities adopting these standards in the future, particularly those listed on the U.S. stock exchanges.

Significant Recent Developments

April 2021

On April 30, 2021, following the very favorable feedback to its September 30, 2020 Consultation Paper, the Trustees of the IFRS Foundation proposed amendments to the IFRS Foundation Constitution that would enable the creation of a new sustainability standards board under the governance of the Foundation. They also released a feedback statement summarizing the main messages they received in response to their sustainability Consultation Paper.

De­cem­ber 2020

On December 18, 2020, following their September 2020 statement of intent to work together towards a comprehensive corporate reporting system, the five internationally significant framework- and standard-setting institutions (CDP, CDSB, GRI, IIRC, and SASB) have published a prototype climate-related financial disclosure standard.

On December 11, 2020, the latest report released by the Climate Disclosure Standards Board (CDSB), “The state of EU environmental disclosures in 2020”, analyzes the strengths and weaknesses of disclosure among the 50 largest companies in the European Union under the EU Non-Financial Reporting Directive. CDSB’s report concludes that investors’ ability to integrate information disclosed under the EU’s rules into their decision-making is inherently limited without further improvements to the Non-Financial Reporting Directive on TCFD, risk and materiality.

November 2020

On November 25, 2020, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) have announced their intention to merge into the Value Reporting Foundation, a unified organization intended to provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards.

September 2020

On September 30, 2020, the Trustees of the IFRS Foundation published a consultation paper to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards. Comments on the consultation paper are requested by December 31, 2020. After an introductory assessment of the current situation, which stresses the growing and urgent demand and the need for consistency in reporting and comparable information, the consultation paper sets out high-level options for the IFRS Foundation. These options are explained as maintaining the status quo, facilitating existing initiatives, or creating a Sustainability Standards Board (SSB) and becoming a standard-setter working with existing initiatives and building upon their work. For establishing the possible new sustainability standards board the existing IFRS Foundation’s three-tier governance structure could be leveraged. The new board could operate alongside the International Accounting Standards Board (IASB) under the existing governance structure, build on existing developments and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters.

On September 11, 2020, five internationally significant framework- and standard-setting institutions (CDP, CDSB, GRI, IIRC, and SASB) have published a statement of intent to work together towards a comprehensive corporate reporting system. While GRI, SASB, CDP and CDSB set the frameworks and standards for sustainability disclosure, including climate-related reporting, along with the TCFD recommendations, the IIRC provides the integrated reporting framework that connects sustainability disclosure to reporting on financial and other capitals. These organizations have now declared their intent to provide: (i) joint market guidance on how the frameworks and standards can be applied in a complementary and additive way;(ii) a joint vision of how these elements could complement financial generally accepted accounting principles (financial GAAP) and serve as a natural starting point for progress towards a more coherent, comprehensive corporate reporting system; and (iii) joint commitment to drive toward this goal, through an ongoing program of deeper collaboration between them, and a stated willingness to engage closely with other interested stakeholders.

August 2020

On August 20, 2020, the CFA Institute, a global association of investment professionals, issued a consultation paper in respect of developing a voluntary, global industry standard to provide greater product transparency and comparability for investors by enabling asset managers to clearly communicate the ESG-related features of their investment products. Responses on the consultation paper are requested by October 19, 2020.



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