On 23 September 2021, the Financial Reporting Council (FRC) published a series of FAQs on International Sustainability Standards Setting. The FAQs are intended to make UK company stakeholders aware of recent developments in sustainability standard setting by the International Financial Reporting Standards Foundation (IFRS Foundation).
The IFRS Foundation is a not-for-profit, public interest organisation established to develop a single set of globally accepted accounting standards - IFRS Standards - and to promote and facilitate adoption of those standards. IFRS Standards are set by the IFRS Foundation’s standard-setting body, the International Accounting Standards Board (IASB).
An International Sustainability Standards Board (ISSB) will be established by the IFRS Foundation to sit alongside the IASB. The formation of the ISSB should be announced in November 2021 so as to align with COP26.
The FAQs include:
- What are the IFRS Foundation’s plans?
- When will International Sustainability Standards be issued?
- How will the standards impact UK companies?
- What about the existing voluntary frameworks that companies have been using to report on sustainability matters?
- How does this interact with other UK non-financial reporting developments?
The FRC expects that a number of the existing frameworks (Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD), Climate Disclosure Standards Board (CDSB)) will form the building blocks of the new international sustainability standards.
The FRC notes that this is a fast moving agenda that has the potential to impact corporate reporting significantly in the future. Hence the publication of the FAQs.