SASB, IIRC Merger to be Finalised by June

Value Reporting Foundation will give investors “the overall picture, instead of just the good parts”, says Federated Hermes.

The Value Reporting Foundation (VRF) is set to be launched during the first week of June 2021 as the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) finalise their merger.

By merging, SASB and the IIRC aim to simplify the reporting requirements for listed companies to better drive global sustainability performance.

“The VRF is one global organisation and it will have a unified strategy, a single governing board and one team, but it will have three prongs: integrated thinking principles, the IR framework and the SASB standards,” said SASB CEO Janine Guillot.

While SASB and IIRC reporting tools will remain complementary with one another in the short- to medium-term, over time the VRF will work to better align the two existing frameworks, said IIRC CEO Charles Tilley, speaking at a webinar on Tuesday.

“As an interim step, we have mapped the SASB standards to four of IR’s six integrated reporting capitals, covering intellectual, social and relationship, human and natural capital,” he explained.

The Value Reporting Foundation will give investors “the overall picture, instead of just the good parts” of investee companies exposure to ESG-related risks and opportunities, said Leon Kamhi, Head of Responsibility at Federated Hermes.

“We want companies to tell their story but also evidence that it’s real,” he explained.

Kamhi added that the VRF’s proposed reporting framework will more clearly outline disclosure requirements on ESG-related information for corporates, which can then be used to generate “higher quality” scores and ratings.

Guillot said both organisations, as the VRF, will continue to work with the IFRS Foundation to establish global sustainability standards.

The Trustees of the IFRS Foundation recently reviewed responses to the body’s consultation paper for a global sustainability standard, mapping out next steps ahead of COP26 in November.

SASB and IIRC are two of the reporting standards-setting bodies colloquially known as the ‘group of five’, which launched a prototype for a global sustainability standard framework in line with the IFRS Foundation’s proposal.

IFRS Trustee and Group CFO of financial services company Itaú Unibanco, Alexsandro Broedel Lopes, said the VRF is “an initiative that’s going in the right direction to enable better communication with investors and the market about sustainability”.

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