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What is the IFRS Foundation and how does it serve the public interest?

The IFRS Foundation is a not-for-profit organisation created in 2001. It serves the public interest by developing globally accepted reporting standards that meet investors and other capital market participants’ need for transparent and comparable information to make economic decisions.


Within the IFRS Foundation, the International Accounting Standards Board (IASB) is responsible for IFRS Accounting Standards—required for use by more than 140 jurisdictions around the world. The newly announced International Sustainability Standards Board (ISSB) will set IFRS Sustainability Disclosure Standards.

The IFRS Foundation Trustees are responsible for the organisation’s strategy, governance and oversight. In turn, they are accountable to a Monitoring Board of capital market authorities responsible for corporate reporting in their jurisdictions, which provides public accountability.

What is the International Sustainability Standards Board and what is its remit?

The Trustees announced the formation of the International Sustainability Standards Board (ISSB) on 3 November 2021 at COP26 in Glasgow. The ISSB will develop—in the public interest—standards that result in a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets.

The intention is for the ISSB’s standards to cover important sustainability topics (environmental, social, governance—ESG) on which investors want information. It will begin with climate, due to the urgent need for information on climate-related matters. It is also the intention that the ISSB will develop both thematic and industry-based requirements.

The ISSB will build on the work of existing investor-focused reporting initiatives—including the Climate Disclosure Standards Board, the Task Force for Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework and SASB Standards, and the World Economic Forum’s Stakeholder Capitalism Metrics—to become the global standard-setter for sustainability disclosures for the financial markets.

How will the IASB and the ISSB work together?

The ISSB will work in close cooperation with the IASB, ensuring connectivity and compatibility between IFRS Accounting Standards and the ISSB’s standards—IFRS Sustainability Disclosure Standards. Each board will be independent, and their standards will complement each other to provide investors and other capital market participants with comprehensive information to meet their needs.

The Foundation also intends to use the IIRC Council to provide advice on establishing connectivity between the work of the IASB and the ISSB via the fundamental concepts and guiding principles of integrated reporting.

How does the ISSB fit in with other organisations developing sustainability reporting standards?

The main investor-focused sustainability and integrated reporting organisations and initiatives have been working jointly for the past six months as part of the Technical Readiness Working Group (TRWG), which was created by the IFRS Foundation Trustees to enable the ISSB to build on existing initiatives and give the ISSB a ‘running start’. This work has been supported by the International Organization for Securities Commissions (IOSCO).

The members of the TRWG are the Climate Disclosure Standards Board (CDSB), the IASB, the Task Force for Climate-related Disclosures (TCFD), the Value Reporting Foundation (VRF—which brought together the Integrated Reporting Framework and SASB Standards) and the World Economic Forum (WEF).

The Trustees announced on 3 November that the IFRS Foundation has reached commitments with the CDSB, whose secretariat is hosted by CDP, and the VRF to consolidate their technical expertise, content, staff and other resources with the IFRS Foundation. The TCFD and WEF fully support the formation of the ISSB.

The TRWG has worked on recommendations for the ISSB. This work includes consolidating and enhancing key aspects of TRWG members’ content to develop two unified prototypes that provide recommendations for consideration by the ISSB of potential climate and general disclosure requirements.

When will the ISSB issue the climate disclosure standard and which items will it focus on next?

The ISSB will work at pace to meet the urgent demand for transparent and comparable reporting on climate matters. The first step will be for the ISSB to consider the TRWG’s recommendations, including the recommendations in the prototypes.

The expectation is that the ISSB will carry out a thorough public consultation on a timely basis in 2022 to give all stakeholders across the world an opportunity to provide feedback both on the new board’s first proposed standards and on which items should be on the ISSB’s initial work plan. This includes consideration of work on both thematic and industry-based requirements.

Consistent with the approach taken by the IASB, feedback to this consultation will be discussed in public by the ISSB before any requirements and the work plan is finalised. The process will be overseen by the Trustees’ Due Process Oversight Committee.

Will the ISSB’s standards be mandatory for companies to use? How will the standards work alongside jurisdictional initiatives?

The G20 Leaders have welcomed the IFRS Foundation’s work programme to develop a global baseline for sustainability disclosure.

The ISSB will develop standards that provide a comprehensive global baseline of sustainability disclosures and develop the standards in such a way that they can be mandated and combined with jurisdiction-specific requirements or requirements aimed at meeting the information needs of broader stakeholder groups beyond investors. Consistent with the approach taken for the IASB’s Accounting Standards, it is for jurisdictional authorities to decide whether to mandate use of the ISSB’s standards.

It is expected there will be a great deal of overlap between the information needs of investors and broader stakeholder groups on sustainability matters. However, the focus of the ISSB will be on meeting investors’ needs, as the Foundation’s remit and expertise is to set standards that provide information for the capital markets.

The ISSB will engage with a range of stakeholders in its standard-setting, including jurisdictions. The Trustees have established a working group to create a mechanism for formal engagement on standard-setting between the ISSB and jurisdictional representatives, including those from emerging markets.

How will the ISSB’s standards approach materiality?

The IFRS Foundation’s focus is on meeting the information needs of investors. The intention is for the ISSB to develop standards that will require companies to provide all material information related to significant sustainability matters that are relevant to investors’ decision-making, including thematic and industry-based requirements. The information needed by investors about the effects of sustainability extends beyond information included in the financial statements. Such information would include forward-looking sustainability matters that are reasonably possible to affect enterprise value creation, preservation or erosion over the short, medium and long term—which therefore would impact investors’ investment decisions.

What should companies reporting, or preparing to report, using existing sustainability disclosure guidance do in the period before the ISSB’s standards are issued?

Companies should continue using the voluntary frameworks and guidance as appropriate. Because the ISSB’s standards will build on existing frameworks and guidance, efforts put into reporting on sustainability matters now is expected to help companies implement the ISSB’s standards in the future. The standards and frameworks of TRWG members, which are relevant for this purpose are:

Who will be the Chair and members of the ISSB?

The Trustees are at advanced stages in appointing the Chair and Vice-Chair(s) of the ISSB and will commence shortly the search for the other ISSB members. The ISSB will comprise 14 members from across the world with a mix of professional perspectives, including investors and preparers.

Where will the ISSB be based?

The ISSB will have a global and multi-location presence. All regions—the Americas, Asia-Oceania and EMEA (Europe, the Middle-East and Africa)—will be covered. Engagement with developing and emerging economies will be an important priority.

Offices in Frankfurt (the seat of the Board and the office of the Chair) and in Montreal will be responsible for key functions supporting the new Board and deeper co-operation with regional stakeholders. Offices in San Francisco, following the consolidation with the VRF, and London will also provide technical support and platforms for market engagement and deeper cooperation with regional stakeholders.

Based on expressions of interest received, the IFRS Foundation will engage without delay with Frankfurt and Montreal to make the necessary arrangements to enable the ISSB to commence work early in 2022. Further discussions will continue with proposals for offices from Beijing and Tokyo to finalise the new Board’s footprint in the Asia Oceania region. Timely actions are needed to respect the urgency expressed by IOSCO and other important stakeholders.

Engagement with developing and emerging economies will be an important priority.