Value Reporting Foundation within a landscape of building blocks
Janine Guillot, CEO of the Value Reporting Foundation (VRF), offers some clear insights in recent ‘Welcome Remarks’ on the global corporate reporting landscape, particularly the ‘building blocks’ concept. The Foundation was recently formed through a merger of the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB).
As she observes, this is a year of momentous advances in sustainability disclosure, with the IFRS Foundation working towards an International Sustainability Standards Board (ISSB), in which the VRF is participating. The European Commission is enacting significant change through its Corporate Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure Regulation (SFDR), while the US Securities and Exchange Commission (SEC) is also reviewing climate disclosure rules.
Sustainability reporting potentially serves a broader array of stakeholders—including employees, customers, civil society, policy makers and investors—than traditional financial reporting. They may have two key types of objective: understanding how sustainability issues affect a company’s financial performance and long-term enterprise value, and understanding how company activities impact society and environment. To these intersecting reporting demands are added different jurisdictions’ regulatory mandates and legal frameworks.
“So, simplifying the ESG disclosure landscape — which both companies and investors decry as the “alphabet soup” — is complex. But it isn’t impossible,” says Guillot. “We believe the solution is a “building block” approach. One building block is a baseline set of global standards, focused on how sustainability issues impact enterprise value, and targeted at disclosure to investors and other providers of capital. This building block would be focused on meeting the baseline information needs of global capital markets. We believe the resources developed by both IIRC and SASB over 10 years can contribute to this solution under the auspices of the IFRS Foundation.”
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