An update on the IFRS sustainability standards consultation process offers encouraging signs that their changes can strengthen financial reporting by companies, which alongside sustainability reporting with both on an equal footing, would improve transparency on sustainability risks and opportunities – according to GRI.
On 8 March, the IFRS (International Financial Reporting Standards) Foundation Trustees shared the strategic direction, taking account of feedback received to their consultation paper. This positions the work as having an investor focus on enterprise value, prioritizing climate-related disclosures, and committing to build on existing reporting frameworks.
Eric Hespenheide, GRI Chairman, said:
“GRI welcomes the direction of travel IFRS is taking, which has the potential to strengthen financial reporting by taking into account the financial opportunities and risks of a company’s sustainability impacts. GRI believes that such strengthened financial reporting complements sustainability reporting, which focuses on disclosing a company’s impact on the world.
With regard to climate change, the limited scope as outlined will not address the wide-ranging impacts that companies have on the planet. We urge the IFRS to set their ambition commensurate with the needs to support companies in articulating the impacts of the full range of sustainability issues on their financial health; including, for example, social issues, tax and biodiversity.
Recognizing investors’ needs for reporting that identifies the effects on value creation linked to social and environmental issues is a step forward. However, companies need to be accountable to a multiplicity of stakeholders. This is why financial reporting and comprehensive sustainability reporting, as enabled by GRI, need to be on an equal footing.
The case for multi-stakeholder reporting, which applies the principle of double materiality, is clear. We will continue to work with IFRS, the European Commission and others to support global changes that fulfil these aims.”
GRI provided a full written response to the IFRS consultation (which closed on 31 December).
In support of a comprehensive reporting system for enterprise value, in December GRI and four other sustainability and integrated reporting organizations published proposals for a climate-related financial disclosure standard.
At the same time as the IFRS Foundation progress their work, the European Commission is exploring how new EU sustainability standards could be created and managed. In January, GRI contributed to the consultation led by the European Financial Reporting Advisory Group.
Global Reporting Initiative (GRI) is the independent, international organization that helps businesses and other organizations take responsibility for their impacts, by providing the global common language to report those impacts.
The GRI Standards, the world’s most widely used sustainability reporting standards, are developed through a multi-stakeholder process and made available as a free public good.
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KEYWORDS: IFRS, Financial Reporting, sustainability reporting, GRI, GRI Standards