Management Commentary

Date recorded:

Project update (Agenda Paper 15)

This paper provided an update on the Management Commentary project. The paper discussed the evolving landscape in which the project has progressed and next steps.

The evolving landscape in which the project has progressed

The paper listed the significant developments since the project was added to the work plan:

  • November 2017 – project added to the work plan
  • September 2020 – IFRS Foundation (IFRSF) consults on the need for global sustainability reporting standards
  • April 2021 – IFRSF proposes amendments to the IFRSF Constitution to accommodate a potential formation of a proposed new board for setting IFRS sustainability standards
  • May 2021 – ED/2021/6 Management Commentary is published
  • November 2021 – IFRSF announces creation of the ISSB and merger of the Value Reporting Foundation (VRF) into the IFRSF
  • November 2021 – comment period for ED/2021/6 ends
  • March 2022 – ISSB launches consultation on first two draft standards
  • May 2022 – IFRSF publishes press release stating that on consolidation of the VRF, the ISSB and the IASB would assume the responsibility for the Integrated Reporting <IR> Framework and would work together to agree on how to build on and integrate the <IR> Framework into their standard-setting projects and requirements

In April 2022, the IASB completed its discussion of feedback on ED/2021/6. The next milestone in the project is for the IASB to determine the project direction.

In determining how to progress the project, the IASB will need to consider the evolving reporting landscape as well as stakeholders’ calls for the IASB to collaborate with the ISSB in developing the final requirements. The IASB will also need to consider the possible implications of the commitment to consider opportunities to address similarities and differences between the <IR> Framework and the proposals developed in the Management Commentary project.

The ISSB’s future consultation on its agenda priorities provides an opportunity for the ISSB to receive information from its stakeholders about prioritisation of the collaboration with the IASB on various projects, including the Management Commentary project, relative to other alternatives.

To facilitate the discussion about possible ways forward on the Management Commentary project in the light of the feedback received on ED/2021/6 and the evolution in the reporting landscape, the staff plan to develop alternatives and present them to the IASB at a future meeting.

IASB discussion

IASB members acknowledged that the landscape has changed significantly since the ED was published and also noted that the feedback received, although only 8 months old, could be significantly outdated. IASB members agreed that this was an area where the IASB and the ISSB would have to work together and that the IASB would have to make a series of decisions, including whether to finalise parts of the proposals that relate to financial statements only and what the status of the Practice Statement will be. The IASB would have to identify how the document fits together with the <IR> Framework and the ISSB’s standards. Instead of a Practice Statement it could be seen as a repository for broader sustainability reporting.

One IASB member noted that management commentary will also be part of the ISSB’s agenda consultation and the IASB may want to wait for the outcome of that. It was also suggested to reactivate or reconfigure the Management Commentary Consultative Group (MCCG) to undertake targeted outreach on what exactly respondents mean when they ask for connectivity. It was noted that the ISSB’s standards are location agnostic while the Practice Statement is not. The Chair agreed and said that targeted outreach should be undertaken in that regard.

No decision was asked of the IASB.

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