Our use of cookies

We use necessary cookies to make our site work. We’d also like to set optional analytics cookies to help us improve it. We won’t set optional cookies unless you enable them. Using this tool will set a cookie on your device to remember your preferences.

For more detailed information about the cookies we use, see our Cookie policy

Necessary cookies

Necessary cookies enable core functionality such as security, network management, compliance and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytics cookies

We’d like to set Google Analytics cookies to help us to improve our website by collecting and reporting information on how you use it. The cookies collect information in a way that does not directly identify anyone.


The measure of success: Five key things the IFRS Foundation’s International Sustainability Standards Board needs to have real impact

Over 17 years ago, A4S set out to change the reporting landscape. With the announcement of the IFRS Foundation’s new International Sustainability Standards Board (ISSB), which will also merge the Value Reporting Foundation (VRF) and the Climate Disclosure Standards Board (CDSB), we are now at an exciting point where the vision that we have collectively developed for reporting is – at long last – becoming a reality.

Speaking at the 2021 Finance for the Future Awards via a pre-recorded video message the day before the announcement1 HRH The Prince of Wales said, “When I first established Accounting for Sustainability back in 2004, my aim was to help ensure that we were not battling to meet 21st century challenges with, at best, 20th century decision-making and reporting systems. I am relieved to hear that, seventeen years later – so not before time! – real progress is being made. Tomorrow, a key focus of discussions at COP26 will be on finance, including, I hear, the establishment of the IFRS Foundation’s International Sustainability Standards Board. Accounting for Sustainability – A4S – has contributed to this progress by bringing together many of the key global organizations involved in the reporting arena, firstly through the establishment of the International Integrated Reporting Council at a roundtable that I hosted in 2009, and then the Task Force for Climate-related Financial Disclosures in 2015. Additionally, A4S works with CFOs and investors to support the practical adoption of reporting frameworks to drive better decisions.”

A4S’s work in this area, along with that of many other individuals and organizations, is now culminating in the creation of the ISSB. This is a significant milestone towards the establishment of an accounting and financial system that can provide the foundation for a vibrant and sustainable economy – a 21st century system fit to deliver the information critically needed for the challenges now faced.

Why we need global sustainability-related reporting standards

To tackle the climate crisis, businesses and investors need to make informed decisions. But without the right information we are walking blindly, and we will inevitably fall short of the reductions in greenhouse gas emissions needed to avoid the worst impacts of climate change.

96% of the world’s largest 250 companies prepare sustainability reports, but without global mandatory reporting standards on par with and connected to those for financial reporting the quality and comparability of the information in these reports can be limited. This makes informed decision making difficult for investors and other stakeholders, and increases the risk of greenwashing. Further, setting credible net zero greenhouse gas emission goals and assessing whether we are on track to meet them is dependent on robust measurement, accounting and reporting along the full value chain.

What has been announced?

The IFRS Foundation is a public interest organization established to develop a single set of high-quality, understandable, enforceable and globally accepted accounting standards – IFRS Standards – and to promote and facilitate their adoption. Given the impact of environmental and social risks and opportunities on financial performance and position, and the focus of the capital markets in shifting finance towards delivering sustainable outcomes, the IFRS Foundation is key to the adoption of global sustainability-related reporting standards focused on providing investors with the information they need. With the International Organization of Securities Commissions (IOSCO) also heavily involved in the process there is significant potential to adopt global reporting standards and provide comparable and consistent reporting to investors.

There are three key parts to the IFRS Foundation’s announcement. Firstly, confirmation of the ISSB’s establishment; secondly, the merger with the VRF and CDSB, and thirdly, the release of two prototypes which will help to accelerate the development of the ISSB’s standards, once the board members have been appointed in the coming months. Additionally, the IFRS Foundation has confirmed that the ISSB will have a multi-location structure, helping to ensure that standards can be developed reflective of differing regional needs.

The ISSB aims to develop and maintain a global set of sustainability-related reporting standards. The Technical Readiness Working Group (TRWG), formed by the IFRS Foundation Trustees to undertake preparatory work for the ISSB, has concluded its work on two prototype documents which the ISSB will consider as part of its initial work programme. This will be key to rapid development of the standards and gives companies a clear point of reference to assess readiness.

The ISSB standards will be focused firstly on climate-related risks, with an expectation to expand into other environmental, social and governance (ESG) issues in the future. Developing global standards for sustainability reporting in this way will provide investors, and other capital market actors, with the information they need to assess and evaluate an organization’s business performance, inclusive of social and environmental factors. It could also open the door for investors to see the impact of their investments and channel finance towards sustainable outcomes at the scale so desperately needed, although it is important to highlight that the ISSB will focus on enterprise value-relevant ESG issues only, so companies and investors will need to continue to draw on standards such as those developed by the GRI which use an impact lens to determine materiality.

A number of governments have already signalled their intention to adopt the ISSB’s standards, in some cases alongside standards which also enable the assessment of a company’s impact on society, the environment and the economy. This ‘dual materiality’ approach is the focus of the EU’s current work to develop its own standards, which are leveraging the existing GRI standards as a key reference point. One of the big complaints from companies and investors is the ‘alphabet soup’ of standards, creating confusion and complexity and acting as a barrier to action. Today’s announcement is a big step towards simplification, but still won’t result in the one single standard setter that some have hoped for.

What’s next?

To be successful the ISSB needs to achieve five things:

  1. Acceptance from global governments
    It is critical that global standards are adopted worldwide rather than just used to inform and influence country and region-specific standards – the latter would likely lead to fragmentation in reporting. Finance Ministers and Central Bank Governors from 37 jurisdictions around the world welcomed the announcement2, a positive sign that must be translated into mandatory adoption, as has been signalled in the UK.

  2. Interoperability
    The ISSB has limited its remit to be focused on enterprise value. However, many governments, as well as companies and their stakeholders, want to understand the impact that an organization has on the world, not just how the world impacts the organization. We won’t achieve net zero goals without this ‘dual materiality’ perspective. The Global Reporting Initiative (GRI) currently sets the most widely-adopted standards in this area, and it is therefore critical that the ISSB collaborates with GRI to ensure that both sets of standards are consistent and aligned with one another. This is important not only to avoid confusion and duplication of effort, but also because an organization’s impact on the world can quickly ‘bite back’ to hit financial performance if not addressed.

  3. Connection to the work of the International Accounting Standards Board (IASB)
    IASB is responsible for setting financial reporting standards adopted in most countries worldwide. Climate and other ESG matters can be material to the financial statements, as commentary released by the IASB, and our work on integrated reporting, underline. There needs to be a consistent framework for sustainability reporting which is coherent with, and connected to, financial reporting to align with the IASB’s own mission to serve investors and other primary users of financial statements.

  4. Rapid implementation
    A key concern from CFOs, investors and others across our networks is that the IFRS Foundation will not be able to have standards in place at the kind of speed necessitated by the climate crisis and other pressing social and environmental issues. The release of the prototypes is an important step in this direction. It will be vital that the ISSB builds on this work, in particular as the prototypes themselves are grounded in existing widely used frameworks and standards, and moves forward with its work programme rapidly.

  5. Credibility
    The IFRS Foundation has strong governance and global representation, but its main stakeholder groups and current boards are grounded in the financial and accounting world. To be credible, it will be essential that the new ISSB board members come from diverse backgrounds and can demonstrate the kind of breadth and depth of knowledge across the wide range of ESG issues that they will need to develop credible standards.

While the IFRS Foundation proposal will address many of the most pressing needs for sustainability reporting, it will not address all challenges. There will likely still be regional variation in reporting requirements, as well as demands from investors and other stakeholders for additional disclosure. Companies will also continue to receive reporting requests from the growing set of ESG ratings and indices.

Agility and continued focus will be key for companies to stay ahead and A4S will continue to support CFOs and the wider finance community in navigating this rapidly evolving landscape. We are currently in the process of creating extra guidance on the topic of reporting. Having completed several roundtables this year we have identified five key areas to be addressed from which we are producing a series of insight documents (Governance, Materiality, Data Collection, Selection of Standards and Quality of Disclosure). We also expect to add to our Essential Guide series with a guide on reporting.

If you want to stay abreast of the latest developments and access this practical, ‘how to’ guidance, sign up to our newsletter.


1. Tuesday 2nd November 2021

2. Australia, Brazil, Canada, Chile, China, Egypt, Ethiopia, European Commission, Fiji, France, Germany, Greece, Guatemala, India, Indonesia, Italy, Jamaica, Japan, Kenya, Korea, Luxembourg, Mexico, Morocco, Netherlands, New Zealand, Nigeria, Philippines, Saudi Arabia, Seychelles, Singapore, Spain, Switzerland, Tonga, Turkey, UK, Uruguay, USA

You may also be interested in...

Navigating the reporting landscape

This guide, created by the A4S Accounting Bodies Network, offers a brief introduction to the changing corporate reporting landscape. It summarizes recent key developments in sustainability reporting. It sets out how these developments are impacting the role of the accountant and shaping the future of corporate reporting. It also highlights how this area is likely to evolve, offering signposting to further sources of information.

Essential Guides

The guides are designed to inspire the financial community to action by providing practical guidance, knowledge and case studies.


Stay up to date with all the latest news at A4S. Our Monthly Newsletter includes the latest guides, reports, stories and thought pieces from finance leaders from across the globe.

Accounting for Sustainability is a Charitable Incorporated Organization, registered charity number 1195467. Accounting for Sustainability is part of the King Charles III Charitable Fund Group of Charities.
Registered Office: 9 Appold Street, 8th Floor, London, EC2A 2AP