IFAC calls for up-front integration by IASB and ISSB
The International Federation of Accountants (IFAC) has set out a strong position in the ongoing sustainability debate, calling for an integrated global approach to reporting. In both a recent statement and a comment letter to the International Sustainability Standards Board (ISSB) on its agenda priorities, IFAC calls for collaboration between the ISSB and the International Accounting Standards Board (IASB) to develop global best practices for a ‘front of the report’ solution connecting financial and sustainability information.
IFAC congratulates the ISSB on its work so far on developing its first two Standards: for addressing the need for ‘climate first’ with IFRS S2 and also delivering IFRS S1 on broader disclosure of investor-focused information about sustainability-related risks and opportunities. In the near term, it supports the ISSB’s focus on high-quality implementation, and also notes the importance of interoperability with other major standards.
In the longer term, IFAC urges integration in reporting. “IFAC believes that now is the time for the ISSB and IASB to jointly develop the global baseline for a holistic, narrative analysis of how reporting entities create, preserve or erode value over time, including how sustainability disclosures are connected to financial position and performance,” it states. This should combine, suggests IFAC, elements of the <IR> Framework on integrated reporting with the IASB’s work on Management Commentary. Its vision is one of “a coherent and comprehensive system of investor-focused, general purpose financial reporting that includes both sustainability-related financial information and financial statements.”
Greater connectivity between financial and sustainability information – in some form – certainly seems to be inexorably and increasingly required across the reporting landscape – and will be greatly facilitated by the use of XBRL as a common reporting language.