Advances in Consolidation and Globalization of ESG Requirements: CRD Dissolves to Help IFRS Basis and ISSB | Bass, Berry & Sims PLC
Last month, at the United Nations Climate Change Conference 2021 (commonly referred to as COP26), the International Financial Reporting Standards Foundation (IFRS Foundation) announced the formation of an International Sustainability Standards Board (ISSB).
The IFRS Foundation also announced that it has entered into a consolidation agreement with the Climate Disclosure Standards Board (CDSB), an initiative of CDP (formerly the Carbon Disclosure Project), and the Value Reporting Foundation (which emerged from the already merged International Integrated Reporting) Has Council (IIRC) and Sustainability Accounting Standards Board (SASB) Foundation).
In view of these developments, the Corporate Reporting Dialogue (CRD) – an initiative convened in 2014 to strengthen collaboration, coordination and coordination between the most important international standard-setters and framework developers – was dissolved last month. The IIRC formed the CRD in response to “market demands for better alignment and less burdens in corporate reporting”. In connection with its dissolution, the CRD noted the success of its mission, given the impending consolidation of four of its seven members with the creation of the ISSB.
Background: The CRD has made considerable progress since it was convened in 2014. His work included a landscape map showing the links between different reporting initiatives from an integrated reporting perspective and a paper setting out the principles of transparency and accountability required for all corporate reporting. His efforts most recently culminated in the Better Alignment Project, which was instrumental in laying the groundwork for recent announcements to consolidate and deploy a comprehensive, coordinated system for international reporting. See our June 2021 and December 2020 blog posts on consolidation efforts.
All parties within the dissolving CRD will support the ongoing work of the ISSB. The IFRS Foundation and the ISSB plan to establish an advisory group structure that will enable ongoing coordination and collaboration between organizations advocating improved, standardized disclosure – an effort previously supported by the CRD.
The Securities and Exchange Commission (SEC) staff have been monitoring these efforts. Earlier this month, SEC Acting Chief Accountant Paul Munter released a statement on “Quality Financial Reporting in a Complex Environment,” in which he described “international developments in the field of[is] Topic ”, in particular the“ formation of a global sustainability standards board ”, namely the“ International Sustainability Standards Board (‘ISSB’) for the definition of IFRS sustainability standards ”. In our July 2021 blog post, we also described how the staff previously expressed their support and viewed IFRS as the company that sets global standards for sustainability reporting.