Financial Reporting in a Fragmenting World

Andreas Barckow, Chair of the International Accounting Standards Board (IASB), delivered a keynote address at the IFRS Foundation Conference on 23 June. He opened the speech by reflecting on the IASB’s strong performance in 2024, marked by the completion of important projects and the launch of new initiatives aligned with stakeholder priorities. Against a backdrop of rising geopolitical fragmentation and shifting economic alliances, he emphasised the continued relevance of global accounting standards in promoting market confidence and comparability among jurisdictions.

This is the prepared version of the speech and may differ slightly from the oral version.

Good afternoon and a very warm welcome to everyone joining us this year, both in person and virtually.

The world is going through times of dramatic change—change that few would have imagined only half a year ago. We are witnessing what some are deeming the end of the world order established after the Second World War.

You may wonder whether this geopolitical development has any implications for us here at the Foundation, and for the work of the IASB more specifically. I want to devote my keynote to sharing some thoughts in this regard.

But before I talk about financial reporting in a fragmenting world, I want to take the opportunity to take stock of what we accomplished last year.

Delivering on our commitments

2024 was a significant and highly successful year for the IASB—not just because of the tangible output we produced, but also because of the progress we made on the commitments we set out in 2022 as a result of the Third Agenda Consultation.

Back then, stakeholders told us loud and clear not to start any new major work, but to concentrate on getting standards finalised before embarking on new projects.

Last year we completed seven projects, including the two that led to new Accounting Standards—IFRS 18 on Primary Financial Statements and IFRS 19 on a reduced disclosure regime for eligible subsidiaries. These completions allowed to us start work on two major new projects: Intangible Assets and the Statement of Cash Flows. Both were identified by stakeholders around the globe as high priorities in our 2022 Third Agenda Consultation.

We also conducted a total of 13 consultations, and almost all of our standard-setting projects are now in their final phase of development.

Delivering on this ambitious programme and following through with the commitments we made to our stakeholders is a marker of success by itself. But what really gives that success meaning is the continued support of over 140 jurisdictions and the active engagement in our work from stakeholders in those jurisdictions. I would like to acknowledge all those that have engaged with us and continue to do so, and express my deep gratitude for your commitment.

Your ongoing engagement tells us something important: there continues to be strong global recognition of the need for consistent, high-quality financial reporting standards—standards that help companies to compete and communicate effectively in the global economy. And that is even more the case in these times of growing geopolitical uncertainty.

Outlook and global context

‘Better information for better decisions’ has been our mantra, and we remain focused on making financial reporting useful for investment decisions. At the same time, we recognise the importance of balancing investor needs with those of other stakeholders. Wherever possible, we aim to reduce cost and complexity in the system—while helping companies better tell their stories.

Now, the environment of uncertainty continues to present challenges. We are seeing growing geopolitical volatility, shifting economic alliances and new challenges—all of which are reshaping international cooperation in complex and often unpredictable ways. In this environment, two broad forces are influencing the landscape in which we work: fragmentation and integration. My address today will reflect on this evolving balance, and what it means for our work.

Let me begin by sharing a central perspective that will guide my remarks today. Even in a world shaped by divergent pressures, global financial reporting standards remain valuable tools for promoting market confidence.

While financial reporting is first and foremost a technical discipline, it also plays a critical role in maintaining transparency and comparability—two essential ingredients that global markets depend on. Safeguarding these qualities is not incidental. And it is not something that any single stakeholder can achieve alone. It requires ongoing collaboration, shared commitment and your continued support.

The dual reality of the global economy

We can observe growing signs of fragmentation in the global economy. Geopolitical tensions are reshaping long-standing partnerships. Protectionist policies are influencing trade relationships. And supply chains are being redrawn in response to shifting priorities and risks.

Taken together, these developments appear to suggest more than just temporary disruptions. They point to deeper structural change in the global order.

Yet, these fragmenting forces do not tell the full story. In parallel, we also see strong and persistent signs of continued integration. Global capital markets remain deeply interconnected, requiring a common language for investment analysis. Investors continue to demand consistent, comparable, cross-border information to make informed decisions.

This is the dual reality we face: fragmentation in policy and politics but continued integration in markets and investor needs.

Financial reporting sits within this tension. While it cannot solve the broader challenges, it can help maintain some consistency, providing one stable reference point even as other systems diverge.

Implications for financial reporting standards

So, how do these broader fragmenting forces translate into our specific domain?

We are seeing political pressures that could have a direct bearing on our work. The regulatory frameworks we depend on are facing increasing pressure to undergo more substantive deregulation. While the system has so far remained robust, any weakening of enforcement mechanisms could pose significant risks, not only to global financial stability, but also to the consistency and credibility of financial reporting.

We regularly scan the horizon for geopolitical trends and developments, and assess the likelihood that they will have an impact on our ongoing work and mission—directly or indirectly. Even though most geopolitical challenges extend beyond our mandate, we cannot and should not lean back and let go. We are part of an ecosystem with other stakeholders, and we all play our part to achieve the ultimate greater good.

Closer to home, we are observing more opportunistic behaviour from some stakeholders in response to some of our projects. Stakeholders naturally draw on convergence with US GAAP when it strengthens their position—while understandably prioritising local or regional considerations when they view them to be pertinent to particular circumstances.

I do not think these dynamics are new; they ebb and flow and have existed for as long as I have been involved in financial reporting.

While the legacy convergence programme with our colleagues at FASB came to an end more than 10 years ago, it is important to highlight the role we both play in fostering convergence where it truly adds value. We maintain regular, constructive dialogue with the FASB at all levels of the IASB. We draw on their experience and technical work whenever there is an opportunity to do so. And when we are tackling similar issues, both the IASB and the FASB make deliberate efforts to keep ourselves informed of learnings and experience gained by the other side.

We also continue to observe and receive calls for jurisdictional tailoring, such as carve-outs and exceptions. These calls may be driven by legitimate national considerations, and our aim is to work constructively with jurisdictions to address these concerns. However, we must also recognise that, taken together, these pressures present challenges to the global comparability that markets depend on. Every exception, no matter how well intentioned or isolated, can contribute to greater fragmentation over time. And the consequences should not be underestimated.

Fragmentation can lead to information silos, making it harder for investors to assess cross-border risks and opportunities. And this, in turn, may affect how capital is allocated—with investors potentially asking for higher risk premia or, at worst, bypassing jurisdictions where reporting is seen as less reliable, or where comparability is compromised.

Hence, even well-intentioned deviations from global standards can contribute to this effect by inadvertently undermining investor confidence. Ultimately, consistency in financial reporting is not just a technical consideration but an economic imperative that benefits all market participants.

Navigating with resilience

So, how do we respond to these challenges? We respond as we always have—by adapting, prioritising and remaining anchored to our core purpose. We remain committed to helping stakeholders navigate financial reporting, even in a changing world order, and to removing unnecessary cost from the system wherever possible.

Our most recent work shows this commitment in practice, so let me point you towards three recent examples that demonstrate our agility, how we help remove cost from the system and how we are addressing the reporting of uncertainties.

As to agility, I would like to point out the changes we made to IFRS 9 to address the topic of sustainable finance and how it is reflected in the accounts. We also amended the literature for what is deemed an ‘own use’ contract to help stakeholders address the challenges around renewable energy contracts. In both cases, the IASB moved swiftly and finalised solutions in less than two years.

IFRS 19 is a good example of how we responded to stakeholders’ calls to reduce the reporting burden for companies within a group. The Standard allows eligible subsidiaries to apply IFRS Accounting Standards while reducing their disclosure requirements. It is a practical, tangible example of how we are reducing reporting costs for companies without compromising the integrity or the usefulness of the information provided.

And finally, regarding addressing uncertainties, I would like to point out our project reflecting climate-related risks and uncertainties in the financial statements. We have just voted to publish a suite of seven illustrative examples that demonstrate how our principles-based literature applies when considering whether and what to report in the financial statements, taking climate risk as an example. We aim to publish a near-final draft in July 2025 and will be making that available on our website to allow our stakeholders early access.

These are just three examples of how we have helped and continue to help stakeholders to navigate through challenges. Each timely response helps reinforce trust in the system, even during periods of disruption.

Our role in a fragmenting world

Let me conclude by returning to my key perspective that even as the world experiences fragmenting pressures, global accounting standards continue to hold value within our specific domain. They provide a point of consistency in an evolving and often uncertain global landscape.

This is not a theoretical claim. We continue to receive strong support from global investors and securities regulators, who recognise the important role that IFRS Accounting Standards play in promoting trust in capital markets.

Our direction is steady, even when the road is not always smooth. We cannot prevent fragmentation—that lies beyond the power of any single organisation. But what we can do is provide and maintain high-quality global standards, support consistent application and work constructively with our stakeholders to sustain confidence in the system.

By doing so, we contribute to better reporting and to stronger, more resilient capital markets. We help support efficient capital flows, better risk assessment and more informed decision-making.

This does not mean that we can overcome fragmentation. But our work matters because integration in markets demands trust in the information that flows across borders. If we stay grounded in that purpose, we can continue to serve effectively in this changing environment.

Thank you.