Taking stock and building for the future

Erkki Liikanen delivered this speech on the first day of the IFRS Foundation Conference, 23 June 2025.

Good morning, and welcome to this year’s IFRS Foundation Conference. 

My name is Erkki Liikanen and I serve as the Chair of the IFRS Foundation Trustees. The Trustees are responsible for the governance, oversight, strategy and funding of the Foundation. This work involves long-term planning in close coordination with the leadership of the Foundation and its two standard-setting boards, the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB). 

The Foundation combines private sector innovation and market engagement, with oversight by a Monitoring Board of public authorities responsible for capital markets. This public / private model has served the organisation well.

The team has put together an impressive conference programme, with presentations from the leadership of both boards, our staff and many external experts. You have a lot to get through! So, for my opening remarks I will limit my comments to addressing three key questions—how did this start, how are we doing, and where are we headed?

How did this start?

First, ‘How did this start?’. 

Why is this question relevant? For many of you in the room, IFRS Standards have existed since the beginning of your professional careers. However, they have not always existed. It is important to remember how far we’ve come, to avoid taking this progress for granted and to make sure we don’t slip back.

IFRS Accounting is a 25-year success story, far exceeding the ambitions of those who created the organisation back in 2000. I know this, because I was then a European Commissioner. 

The first Chair of the Trustees was my predecessor and friend, Paul Volcker—the legendary former Chair of the US Federal Reserve, who was credited with rescuing the US economy in the 1970s. Paul often came to Brussels to present the work of the Foundation. At the time, the European Union was considering its Financial Market Action Plan as part of the Lisbon Treaty. It urgently needed a solution for common EU-wide accounting standards. 

Europe’s need coincided with accounting failures in the US following the collapse of Enron and WorldCom. Additionally, the Asian Financial Crisis had knocked confidence in accounting standards used in many other parts of the world. At an international level, market regulators at IOSCO were calling for a global solution.

Paul Volcker delivered a seminal speech at the European Commission titled ‘The Crisis in Accounting’. The speech is still available on the internet and it’s well worth a read to remind us all of how far we’ve come. 

These developments created the necessary support for global accounting standards, and the rest is history. Demand-driven. Market-led. Investor-focused.

Europe and others led the way, and we now have more than 140 countries using IFRS Accounting Standards. Many of you in this room played important roles in their adoption and implementation. Our success is your success. Thank you.

History tends to repeat itself. Some two decades later, the challenge was sustainability disclosures. Investors wanted to understand companies’ sustainability-related risks and opportunities. Voluntary standards provided a partial solution, but once again global market regulators and others wanted more. Given the success of IFRS Accounting Standards, many asked for the Foundation to play a role.

In 2020, the Trustees consulted on demand for global sustainability standards, whether the Foundation should play a role and, if so, what that role might be.

The response was clear. Strong support for global standards and support for a new standard-setting board within the Foundation to deliver them. Once again, demand-driven. Market-led. Investor-focused.

Shortly after, we launched the International Sustainability Standards Board at the COP26 Climate Conference in Glasgow and appointed its board and leadership. We also announced the consolidation of the leading investor-focused sustainability standards and organisations into the Foundation, reducing the alphabet soup.

The ISSB published its inaugural standards in 2023 and now jurisdictions representing around 60% of GDP are using or considering using those Standards. The progress in such a short period of time has been remarkable.

What lessons do we draw from this experience? We are not politicians or indeed policymakers. We are an apolitical, market-neutral standard-setter. Our mission is ‘better information for better decisions’, whatever those decisions may be. We respond to market demand and, in doing so, we satisfy that demand through high levels of transparency, market engagement and high-quality work. It’s been a great success.

How are we doing?

The second question is ‘How are we doing?’.

Whilst we produce high-quality Standards and have many jurisdictions using them, to what extent are they delivering tangible benefits for capital markets and society more broadly?

To help answer this question, the Trustees asked a group of eminent academics in September last year to conduct a review of relevant literature and to draw some conclusions. 

The group of Academic Fellows is chaired by Lucrezia Reichlin, a former Trustee and respected academic from London Business School. Other members are academics from leading business schools across Asia, Europe and the Americas.

The group has completed its first report to the Trustees; read the Group of Fellows report in full on the June Trustees meeting page. It is well worth taking a look.

The review looked at both the capital market effects of IFRS Standards, but also the consequences beyond capital markets. The authors drew on two decades of research on financial reporting and the much more recent literature on sustainability reporting.

The review identified that for capital markets, the better information provided by applying IFRS Standards has helped reduce investor uncertainty and has minimised the risk of asymmetric information provided to the market. Better information leads to increased market liquidity, which reduces investors’ transaction costs and lowers the cost of capital. 

At the same time, the research makes clear the difficulty of breaking out the effects of the introduction of IFRS Standards from other regulatory innovations introduced at the same time. As such, IFRS Standards are best thought of as part of a set of capital market standards and practices for sound, stable and well-functioning financial systems. Indeed, this is how the Financial Stability Board describes our work.

The review identifies three takeaways for the Trustees to consider.

• First, longstanding evidence on financial reporting and emerging evidence on sustainability disclosures indicate standards have significant capital market and broader effects. However, the magnitude of those effects is difficult to predict. This unpredictability is one of the reasons why we undertake post-implementation reviews of major Standards a few years after the effective date.
• Second, the Standards themselves are necessary but not sufficient to enhance the quality and consistency of reporting. Equally important is the institutional infrastructure to ensure the Standards are well-embedded, implemented and enforced. This is why we work in close collaboration with international and jurisdictional authorities, regulators, auditors and other standard-setters to ensure proper application of the Standards. Moreover, this conclusion demonstrates why the work being undertaken by the ISSB and its partners to build market and jurisdictional capacity is essential.
• The third consideration relates to the cost of applying IFRS Standards. The authors highlight the need to ensure proportionality in disclosure requirements with a strong focus on only requiring the disclosure of information that is material to investors. This balance is particularly important when set against the current trends in many jurisdictions to focus on competitiveness and to minimise the reporting burden.

I am grateful to the Academic Fellows for the high-quality research they have undertaken. Reading through their report, it is clear that our work has indeed delivered tangible benefits to the capital markets and broader society. However, our Standards are just one piece of the corporate reporting jigsaw and need to be combined with strong enforcement. Moreover, proportionality and a strong focus on information that is material to investors should remain a top priority.

Where are we headed?

The third and final question is ‘Where are we headed?’.

Our organisation has been through a period of rapid change in the last five years to accommodate an expanded remit and to support two boards at very different stages in their maturity. Moreover, we have consolidated the staff and intellectual property from several organisations into the Foundation, which has resulted in a doubling in headcount, a broadening of the skills required and a move to a multi-location model. The ISSB in particular has required up-front investment to match market and jurisdictional expectations—similar to what was needed in the early days of accounting standards consolidation. All this change has occurred while the Foundation continues to serve the needs of the IASB and its own, vital public-interest work.

Following this period of up-front investment and rapid growth, it is appropriate to take stock to ensure the Foundation is well-organised for the next stage in its evolution. This involves building on our success, consolidating the gains and ensuring we are fit for the future.

At the beginning of this year, the Trustees undertook an organisation review. That review has resulted in a two-year transformation programme to build a stronger, more focused and more resilient Foundation that is fit for the future and appropriately resourced to meet its public-interest mission.

The programme has four phases. 

First, we have already reorganised many of our core functions to simplify reporting lines and decision-making across the Foundation. This reorganisation has been essential given the organisation has grown both organically and through consolidation. We have streamlined our non-technical operations and relationship management functions and these changes are already delivering benefits.

Second, we have sought to reduce our operating costs. Work is now complete on reviews of both governance and staff costs. Shortly after our last Trustees’ meeting, we announced the plan to reduce the costs of operating the two boards. Our target is to reduce the size of both boards from 14 to 10 members by the end of 2028, while maintaining a focus on quality and geographic diversity.

Third, we are taking steps to increase revenues, including building a revenue function under senior leadership and refreshing existing funding commitments. This work is important. Funding contributions to support the work of the IASB are gradually drifting down and the ISSB’s seed funding arrangements will need to be renewed or replaced.

Finally, we are starting work to refresh the Foundation’s mid-to-long-term strategy. To do so, we are looking at perspectives on the future of corporate reporting, the Foundation’s role within it and how best to organise ourselves to achieve our mission. While building this strategy, we will consider a more durable and sustainable funding model.

Although transformational change such as this is never easy, I believe it essential to ensure we are fit for the future and well placed for the next stage in our evolution.

Closing remarks

Thank you for your attention and I look forward to meeting some of you during the coffee break. Our success is your success. Thank you for everything you have done and continue to do to support our mission.