The VRF’s consolidation into the IFRS Foundation is now complete

On August 1, 2022, The International Financial Reporting (IFRS) Foundation announced the completion of the consolidation of the Value Reporting Foundation (VRF) into the IFRS Foundation.  The IFRS Foundation’s new International Sustainability Standards Board (ISSB) now oversees the SASB Standards and will work to develop a comprehensive global baseline of sustainability disclosures for the capital markets.

The IFRS Foundation’s International Accounting Standards Board (IASB) and the ISSB now also assume joint responsibility for the Integrated Reporting Framework and are working to build on and integrate this framework into their standard-setting project requirements.

  • The Integrated Reporting Framework supports effective reporting on strategy, governance, performance, prospects, and business model through a multi-capital lens 
  • SASB Standards provide investors with consistent, comparable and reliable information on the ESG factors most relevant to financial performance and enterprise value

The <IR> Framework and the SASB Standards are complementary resources. Together, they provide insight into performance on the complete range of factors that impact long-term value creation:

  • The <IR> Framework provides principles-based guidance for reporting structure and content, while SASB Standards provide industry-specific disclosure topics and metrics to help understand sustainability risks and opportunities in greater detail
  • There is close alignment between the <IR> Framework’s capitals and SASB Standards’ sustainability dimensions: SASB Standards already provide industry-specific disclosure topics and metrics for four of the six capitals in the <IR> Framework, enabling industry-specific content for an integrated report

In addition, the IFRS has issued two Exposure Drafts on Sustainability Disclosure Standards, summarized as follows:

  1. General Requirements for Disclosure of Sustainability-related Financial Information Exposure Draft (link)
    • Requires companies to provide material information on all significant sustainability-related risks and opportunities necessary to assess enterprise value
    • Points to other standards and frameworks in absence of a specific IFRS Sustainability Disclosure Standard
    • SASB Standards are priority materials for identifying sustainability-related risks and opportunities and to develop appropriate disclosures

  2. Climate-related Disclosures Exposure Draft (link)
    • Incorporates the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and industry-based requirements from SASB Standards
    • Includes climate-related industry-based requirements from SASB Standards

Companies that have been following Integrated Reporting, SASB standards and TCFD recommendations will be in a better position to comply with the exposure drafts when they become effective.

The consolidation of these frameworks into the IFRS Foundation will make the ESG reporting process less cumbersome for reporters by providing one source of guidance. 

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