The IFRS Foundation Trustees, responding to an urgent demand for transparent financial-related sustainability disclosures by companies, created the International Sustainability Standards Board (ISSB). The Trustees also agreed that it would be important to build on sustainability disclosure standards that had already been created and to work with the organisations that created these standards.
When the creation of the ISSB was announced on 3 November 2021 at the COP26 climate conference, the IFRS Foundation Trustees announced the planned consolidation of the IFRS Foundation, the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF). The CDSB consolidation was completed in January 2022; the VRF consolidation in August 2022.
The Climate Disclosure Standards Board
The CDSB was an international group of business and environmental non-government organisations committed to making climate-related disclosures as important as financial disclosures in mainstream global corporate reporting.
The CDSB Framework formed the basis for the recommendations of the Task Force on Climate-Related Financial Disclosures, which developed a framework to help organisations disclose climate-related risks and opportunities. The CDSB Framework sets out an approach for reporting environmental information—including climate change and social issues—in mainstream reports, such as annual reports and integrated reports.
The ISSB will use CDSB technical guidance to help it develop IFRS Sustainability Disclosure Standards. During this development, CDSB’s Framework and technical guidance on climate, water and biodiversity disclosures remain useful for companies.
The Value Reporting Foundation
The VRF was a global nonprofit organisation formed from the merger of the SASB Foundation and the International Integrated Reporting Council (IIRC). The VRF offered a suite of resources—including the Integrated Thinking Principles, the Integrated Reporting Framework and SASB Standards. These resources are designed to help companies make transparent and consistent sustainability disclosures, allowing investors and other stakeholders to assess and compare companies’ enterprise value.
The IFRS Foundation will build on the VRF’s resources:
- SASB Standards identify the subset of environmental, social and governance issues most relevant to financial performance for 77 industries. The ISSB has committed to building on SASB’s industry-based Standards and adopting SASB’s industry-based approach to standards development. The ISSB encourages companies and investors to continue to support and use the SASB Standards until they are replaced by IFRS Sustainability Disclosure Standards.
- The Integrated Reporting Framework helps businesses bring together material information about an organisation’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. The International Accounting Standards Board (IASB) and the ISSB will work together to agree on how to build on and integrate the Integrated Reporting Framework into their standard-setting projects and requirements. The Chairs of the IASB and ISSB actively encourage companies to continue adopting the Integrated Reporting Framework.
- The Integrated Thinking Principles are a strategic planning tool to help embed sustainable business practices into an organisation and provide a foundation for long-term value creation. The IASB and the ISSB encourage organisations to continue using the Integrated Thinking Principles and encourage stakeholder engagement to develop the principles as practical guidance that will enhance the quality of corporate governance and reporting.
