As highlighted in the Sustainability and business — the call to action; build back better report, we started a programme of thought leadership to explore accountancy and sustainability. This is part of a series of briefs exploring the topic of sustainability, business and the finance professional’s key role. These briefs will help organisations consider the sustainability issues, how to integrate them into their long-term decision-making and incorporate these issues into internal and external reporting.
This paper is designed as a summary of a specific standard or framework. It is written from the management accounting perspective. As a finance professional, you are likely to encounter one or many of the sustainability frameworks and standards. It is a crowded and fragmented landscape, with slightly different terms, inconsistent language and various measures between the numerous methodologies. Adding to the confusion is whether adoption is voluntary or mandatory and that some organisations work with combinations of standards and frameworks at the same time. Finally, the approaches to reporting also differ. They range from annual reports, integrated reports, sections on an organisation’s website aimed at a specific audience or a stand-alone sustainability report.
Fortunately, there are several initiatives underway to address this fragmented accounting and reporting landscape. They will build a coherent global approach to corporate reporting that encompasses financial and non-financial reporting.1
A framework or a set of standards? The difference
A framework is a set of principles-based guidance for how information can be structured and prepared, and what broad topics should be covered. A set of standards are specific, replicable and detailed requirements for what should be reported for each topic. They are rules-based requirements.
Background
The International Integrated Reporting Council (IIRC), launched in 2010, is a collaboration between Accounting For Sustainability (A4S), the Global Reporting Initiative (GRI) and the International Federation of Accountants (IFAC). It was set up as a coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. The coalition promotes communication about value creation, preservation and erosion as the next step in the corporate reporting evolution.
The International Integrated Reporting (IR) Framework was launched in 2013, and a revised edition was launched in January 2021.2
In November 2020, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) announced their intention to merge into a combined organisation, The Value Reporting Foundation, which was consummated in June 2021.3 The VRF has three core resources, the SASB Standards, the (IR) Framework, and a prototype for Integrated Thinking Principles published in December 2021.4
The VRF was instrumental in the formation of the International Sustainability Accounting Standards Board (ISSB) which the IFRS Foundation announced, coincident with the COP 26 meeting in November 2021. In connection with the formation of the ISSB, the IFRS Foundation also announced plans to complete the consolidation of the CDSB and the VRF into the new board by June 2022.5
As part of building on existing initiatives, the IFRS announcement addresses its plans to leverage the expertise of the CDSB and VRF in the development of reporting standards and also its intention “to use the International Integrated Reporting 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."