10 December 2020

WSBI-ESBG: IFRS Foundation: Consultation paper on sustainability reporting

Question 1: Is there a need for a global set of internationally recognised sustainability reporting standards?

(a) If yes, should the IFRS Foundation play a role in setting these standards and expand its stand-ard-setting activities into this area?

(b) If not, what approach should be adopted?

Yes, we consider there is a need for a global set of internationally recognised sustainability report-ing standards.

Given the background and the expertise in creating financial reporting, WSBI-ESBG considers the role of IFRS should be leading the standard-setting process. We particularly value the transparency on due process procedures and the track record and expertise of the Board of IFRS. We consider IFRS should provide itself with new members and new competencies.

Nevertheless, given the urgency of moving forward in non-financial reporting, we welcome the lead Europe has taken in this matter and we fully support Europe work on non-financial reporting. 

Question 2: Is the development of a sustainability standards board (SSB) to operate under the governance structure of the IFRS Foundation an appropriate approach to achieving further con-sistency and global comparability in sustainability reporting?

Yes, we consider the creation of a sustainability standards board (SSB) would be a good approach to achieve further consistency and global comparability in sustainability reporting.

In our view the SSB should be a parallel structure to the IASB, having the same highest hierarchy level.

We also consider it would be a good mechanism to merge of the global climate agenda, faster pro-gress is required for non-financial reporting communication and dialogue, nominating some mem-bers (for example, 1 or 2 members) to be part of the two Boards.

Question 3: Do you have any comment or suggested additions on the requirements for success as listed in paragraph 31 (including on the requirements for achieving a sufficient level of funding and achieving the appropriate level of technical expertise)?

In our view, it is crucial to count on the support and participation of global, regional, national and local initiatives, nevertheless we think the proper mechanism to do so would be through consulta-tions, requests for feedback, etc., but not having fixed seats on the Board, in order to maintain in-dependency and balanced composition of the BBS.

Question 4: Could the IFRS Foundation use its relationships with stakeholders to aid the adoption and consistent application of SSB standards globally? If so, under what conditions?

Yes, we consider that IFRS Foundation could use its relationships with stakeholders, prevailing the focus on transparency, as business as usual in IFRS. Same transparency would be desirable regard-ing costs and expenses on developing and maintaining these relationships.

Question 5: How could the IFRS Foundation best build upon and work with the existing initiatives in sustainability reporting to achieve further global consistency?

Question 6: How could the IFRS Foundation best build upon and work with the existing jurisdic-tional initiatives to find a global solution for consistent sustainability reporting?

In our view it is crucial to count on the support and participation of global, regional, national and lo-cal initiatives, and jurisdictional initiatives, nevertheless we think the proper mechanism to do so would be through public consultations, requests for feedback, etc., not having fixed seats on the Board nor in other kind of structure (committees, technical groups, tasks forces, etc.), in order to maintain independency and balanced composition of the IFRS structures.

Question 7: If the IFRS Foundation were to establish an SSB, should it initially develop climate-related financial disclosures before potentially broadening its remit into other areas of sustaina-bility reporting?

Question 8: Should an SSB have a focused definition of climate-related risks or consider broader environmental factors?

We consider disclosure related to all dimensions of sustainability (environmental, social and gov-ernance) should be addressed at the same time. Climate impacts and risks are directly linked to other environmental issues, and all of them could have social consequences, so that should be disclosed at the same time, giving a complete view to stakeholders. Hence, in our view, sustaina-bility reporting standards should be developed entirely from the beginning.

Sustainability Standards Board’s focus should include all dimensions of sustainability (environmen-tal, social and governance). One of the main objectives of the sustainability reporting is to respond to the demand of stakeholders to improve the consistency and comparability of sustainability re-porting, whatever the nature of material topics of the companies are. Prioritizing climate leaves behind other environmental aspects that could be key in terms of impact, risks, business opportu-nities…, depending on the company (for example, renewable energy generation has a low nega-tive impact on climate change, but could have high negative impact on biodiversity). Sustainability reporting should give a complete picture of companies, of all industries.

Question 9: Do you agree with the proposed approach to materiality in paragraph 50 that could be taken by the SSB?

WSBI-ESBG agrees with a double-materiality approach. As it is mentioned in the Guidelines on re-porting climate-related information of the European Commission (referred into the IFRS consulta-tion), this approach covers both financial materiality and environmental and social materiality, in a way that includes all relevant information that is necessary for the understanding of a company.

If the development by SSB is gradualist and if the efforts of SSB focuses on the most relevant in-formation to investors and other market participants, we consider the double-materiality ap-proach should maintained, even prioritizing the most relevant topics.

Question 10: Should the sustainability information to be disclosed be auditable or subject to ex-ternal assurance? If not, what different types of assurance would be acceptable for the infor-mation disclosed to be reliable and decision-useful?

WSBI-ESBG considers of paramount importance the sustainability information to be disclosed and be subject to external assurance. One of the main significant problems of sustainability infor-mation, identified by stakeholders, is the limited reliability and comparability it has.

Assurance is essential to ensure the reliability of disclosed information and to achieve the final goal of the reporting.

The type of assurance should depend on the company, beginning from limited assurance and improving it according to the relevancy and readiness of the indicators.

Question 11: Stakeholders are welcome to raise any other comment or relevant matters for our consideration.

• It would be very useful to have a tentative/indicative calendar of deadlines to give our feedback to the Consultation. This is an urgent topic and there are some other initiatives that could condi-tion/ complete/ overlap… the IFRS initiative.

• Timeline to develop sustainability standards board (SSB).

• Timeline to sustainability standards.

WSBI-ESBG

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