Sustainability Reporting Frameworks Converging: IFRS, GRI Agree to Align Disclosure Standards
In the latest move to aimed at harmonizing disparate sustainability reporting systems, the IFRS Foundation and Global Reporting Initiative (GRI) announced today a new agreement to align their align capital market and multi-stakeholder standards for sustainability disclosure.
As pressure from regulators, investors and other stakeholders has built for companies to provide information on the sustainability and climate impacts and strategies of their businesses, several reporting standards and frameworks have gained prominence, such as the GRI, SASB, and TCFD, among others. While often complementing each other, the need to meet the reporting needs of multiple standards have created a burden on companies, and for investors aiming to interpret data from derived from different sources and methodologies.
A recent study of from professional services firm Deloitte surveying hundreds of senior finance, accounting, sustainability, and legal executives found that most companies are currently following multiple reporting standards, with respondents on average reporting using two standards or frameworks, and more than a third using three or more.
Eelco van der Enden, Chief Executive Officer of GRI, said:
“The MoU between GRI and the IFRS Foundation is a strong signal to capital markets and society that a comprehensive reporting system, which combines financial and impact materiality for sustainability reporting, is possible on a global scale.”
At the COP26 climate conference in November 2021, the IFRS Foundation launched the International Sustainability Standards Board (ISSB), aimed at developing IFRS Sustainability Disclosure Standards, in order to provide a global baseline of disclosure requirements that can be used by jurisdictions on a standalone basis or incorporated into broader reporting frameworks.
At the ISSB launch, the IFRS also announced the consolidation of leading sustainability reporting standards organizations the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation into the IFRS Foundation.
Judy Kuszewski, Chair of the GRI GSSB, said:
“The collaboration between the GSSB and the ISSB demonstrates our shared commitment to the global alignment of disclosure requirements. This is crucial if we are to enable consistent reporting by companies, which increases accountability and drives responsible business practices. We look forward to aligning work programs and to making the two-pillar corporate reporting system a reality, with financial and sustainability reporting on an equal footing.”
Under the new collaboration agreement, the ISSB and the Global Sustainability Standards Board (GSSB), the independent operating entity with sole responsibility for the development of GRI sustainability standards, will seek to coordinate their work programmes and standard-setting activities. Additionally, the IFRS Foundation and the GRI will join each other’s consultative bodies related to sustainability reporting activities.
Erkki Liikanen, Chair of the IFRS Foundation Trustees, said:
“At COP26 we heard strong support for consolidation in the sustainability reporting landscape. The work of the ISSB and its global baseline concept will help deliver this objective for the capital markets, whilst this agreement with GRI will help ensure capital market standards are developed in a way that minimises reporting burden for those companies also using GRI Standards.”
Emmanuel Faber, Chair of the ISSB, added:
“For those interested in considering impact when assessing enterprise value, using the standards set by the ISSB and GSSB together will offer a complete and compatible suite of sustainability disclosures. This agreement will see the two standard-setting boards cooperate in pursuit of that objective.”