Rationalising reporting standards and guidelines

We are witnessing significant developments and changes in the ESG (environment, social & governance) reporting standards space, which poses challenges not only for standards bodies and regulators, but also for companies grappling with a multitude of ESG standards and guidelines.

Recent developments include:
•the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) merged to form the Value Reporting Foundation (VRF);
• International Financial Reporting Standards (IFRS) has been asked by governments and financial regulators to set up the new body for writing standards on how listed companies should disclose risks from climate-change on their operations;
•the G20’s announcement supporting global implementation of the TCFD (Taskforce on Climate-Related Financial Disclosures) framework;
•International Accounting Standards Board (IASB, the independent, accounting standard-setting body of the IFRS Foundation) aims to develop a comprehensive framework focused on investors’ and creditors’ information needs;
•IFRS established the International Sustainability Standards Board (ISSB) is to set standards for reporting on a company’s performance on material sustainability issues.

The Corporate Reporting Dialogue, convened by the IIRC, was established to respond to market calls for greater coherence, consistency and comparability between corporate reporting frameworks and standards (founding members include CDP, Climate Disclosure Standards Board (CDSB), Financial Accounting Standards Board (FASB), Global Reporting Initiative (GRI), IASB, IIRC, International Organization for Standardization (ISO) and SASB). However, it hasn’t addressed the increasing complexity, and uncertainty, in reporting standards and frameworks.

This changing space raises a number of questions, which we aim to address in this research proposal: what is the level of communication between the standards bodies?; what is the role, and future, of narrative disclosure in this standards landscape?; is harmonisation desired or achievable, to provide more coherence for companies?; what is the role of Australian standards bodies (e.g., Australian Accounting Standards Board (AASB)) and regulators (e.g. ASIC, APRA)?

This study involves:
1.Desktop review of the ESG reporting standards to identify the similarities, differences, and the connections between the frameworks;
2.Interviews with a broad range of representatives of reporting standards bodies influencing the ESG reporting field (approx.. 20 interviews); and,
3.Interviews with Australian regulators and standards bodies (5-10).

The intention is to provide guidance on the “matrix” of ESG reporting standards to CPA members, and how to navigate this complexity.