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IFRS Foundation, VRF Finalise Consolidation Arrangements

Combination will support the sustainability reporting work of the ISSB, which is also working to establish an MOU with GRI.

The IFRS Foundation and the Value Reporting Foundation (VRF) have agreed to consolidate to better align their sustainability reporting efforts with an effective date on 1 July.

In a statement, the IFRS Foundation said its trustees and the VRF board confirmed their approval of a plan to consolidate the two foundations, a move that was first announced at COP26 in Glasgow in November 2021 as the International Sustainability Standards Board (ISSB) was launched.

The Climate Disclosure Standards Board (CDSB) was already consolidated into the IFRS Foundation earlier this year, transferring CDSB staff and core intellectual property and technical assets to support the work of the ISSB.

In March, the ISSB published its first proposals for investor-focused sustainability reporting standards. Two draft standards are open to feedback until 29 July and are expected to be finalised in late 2022 or early 2023.

Announced on 22 June, the consolidation of the VRF – which houses the Integrated Reporting Framework and the SASB Standards – into the IFRS Foundation will also support the work of the ISSB.

VRF technical expertise, content, staff and other resources will be absorbed by the IFRS Foundation. VRF CEO Janine Guillot will serve as special advisor to ISSB chair Emmanuel Faber and high-level ambassador for the ISSB. In addition, two VRF board directors will become observers to the IFRS Foundation Trustees meetings, and five VRF directors will become part of a newly formed IFRS Foundation Transitional Advisory Group.

Meanwhile, the ISSB is also working to establish an MOU with GRI (Global Reporting Initiative). The MOU was first announced in March and the two bodies met in May to begin work on delivering the MOU, which will commit them to coordinating their work programmes and standard-setting activities.

The ISSB and GRI intend to conduct a mapping exercise to establish those requirements in the ISSB’s standards that are equivalent with GRI Standards in order to guide an exercise on alignment of disclosures, guidance, concepts and definitions. They also plan to develop a methodology to cross-reference between guidance and other materials produced by GRI and ISSB respectively in order to maximise usefulness to preparers of information.

“The ISSB is committed to creating a global baseline of reporting standards that meet the needs of investors,” said ISSB chair Emmanuel Faber. “Our collaboration with GRI will bring clarity to the market on how our two sets of standards can interact to provide a comprehensive and seamless suite of reporting standards that meet the needs of broader stakeholders, while streamlining the process for companies.”

The ISSB is currently in the process of making board appointments. The full board is expected to be appointed by the end of Q3, following which the ISSB will begin redeliberation of the two draft standards published in March.

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