ASCG endorses IFRS Foundation taking on sustainability reporting

The ASCG’s Administrative Board today sent its comment letter to the Trustees of the IFRS Foundation. The Trustees had published a consultation paper on 30 September in which they asked, among other things, whether there was a need for action in the area of sustainability reporting and whether the IFRS Foundation should play a role here (we reported).

The Administrative Board welcomes the Trustees’ initiative as an important step at the right time. It is in favour of the IFRS Foundation taking up the area of sustainability reporting because it has already demonstrated expertise in the area of standard setting due to its globally recognised financial reporting standards developed by an independent board. Since a consolidation of the unmanageable number of standards, templates and frameworks is urgently needed, a certain pragmatism should be applied in the start-up phase. It would be unrealistic to establish and resource a second expert body with the same governance structures and processes as the IASB within a short time.

In concrete terms, the Administrative Board proposes as an intermediate step the creation of a council or committee in which the most important organisations in the field of sustainability reporting come together and seek to harmonise their standards. This would achieve results more quickly on the one hand and gain time to set up the structures and processes as well as to secure the necessary human capital and funding on the other. At a later point in time, this Council or Committee could then be transformed into the envisaged Board – as was already done once with the IASC to the IASB at the turn of the millennium.

Furthermore, the Administrative Board proposes that the new body should set itself a work programme, from which the goals of the standard setting as well as the way to achieve them would become evident. This is important in order to create clarity among the constituents as to what the product to be developed consists of and in which milestones over what period of time this is to be achieved. It is important not to reinvent the wheel, but to draw on what is already available to the greatest possible extent and thereby achieve the desired consolidation.