Further to our recent article ‘Continued momentum on corporate ESG reporting’, the push for standardised reporting on environmental, social and governance (ESG) factors has continued into 2021.

On 26 January 2021, at the World Economic Forum’s annual meeting in Davos, a group of 61 business leaders committed to use the 21 core Stakeholder Capitalism Metrics (SCMs) in their companies’ annual reports. The SCMs were developed by the International Business Council, in collaboration with Deloitte, EY, KPMG and PwC, and are intended to provide a universal and comparable set of ESG disclosures which any company can report on, regardless of industry or region. The SCM project’s twin objectives are: “to accelerate convergence among the leading private ESG standard-setters and to bring greater comparability and consistency to the reporting of ESG disclosures.

Then, on 2 February 2021, the Trustees of the IFRS Foundation announced that they had reviewed replies to their consultation paper on sustainability reporting (published in September 2020). The next step is the formation of a Trustee Steering Committee to oversee the next phase of work on the basis that the review indicated a: “growing and urgent demand to improve the global consistency and comparability in sustainability reporting, as well as strong recognition that urgent steps need to be taken and broad demand for the IFRS Foundation to play a role in this”.

The expectation is that the Trustees will have produced a definitive proposal (including a roadmap with a timeline) by the end of September 2021 and that this may then be followed by an announcement on the establishment of a Sustainability Standards Board (to sit alongside the International Accounting Standards Board) at the COP26 summit in November 2021.

These are both significant developments and are indicative of growing pressure for the introduction of a standard global corporate reporting standard for sustainability metrics, particularly from participants in the asset management industry.

Notably, in his latest “Dear CEO” letter (27 January 2021), Larry Fink of BlackRock stated that “we strongly support moving to a single global standard”.

Then, more recently, the Investment Association, in their 5 February 2021 response to the FRC’s “Future of Corporate Reporting” discussion document (published in October 2020), note that the FRC has endorsed the IFRS’ proposals to create a Sustainability Standards Board and suggest that the FRC’s “initial focus should be on the promotion of a globally harmonised standard for the reporting of non-financial information.”

Written by Peter Dunn and Genevieve Vaughan