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As professional accountants, the chief stewards of business information, we have both an important responsibility and a transformative opportunity to engage in and lead on upcoming changes in corporate reporting, and improving the quality of sustainability information.

The voluntary approach to reporting sustainability information has been in place for a long time and it has not worked. The capital markets do not have consistent, comparable, and assurable information, and greenwashing continues to be prevalent. The immediate development of a baseline of global standards for sustainability information under the IFRS Foundation is important for the capital markets, investor protection and for companies.

Why Is This Important Now?

The world needs better corporate reporting. The demand for sustainability information is driven by institutional investors and asset managers (e.g. Blackrock Larry Fink’s 2021 Letter to CEOs) and other stakeholders wanting better information about an entity’s operations and the effect that it is having on the economy, environment and people/society at large. Stakeholders want information that is relevant, reliable, comparable, and assurable. Unfortunately, there is currently a high degree of confusion in the marketplace due to the variety of frameworks and approaches. This has led to companies using a mixture of reporting standards/frameworks that is not helpful for anybody.

There is also recognition that the climate crisis is real, but no commonly agreed way to measure progress. Commitments to climate targets are hollow if jurisdictions, and the businesses within jurisdictions, cannot measure progress.

A Global Profession Positioned to Lead

IFAC’s corporate reporting and sustainability agenda focuses on:

1. Advocating for a Global Approach to Sustainability Standards

There has been significant global momentum in which IFAC has been a leading advocate. IFAC believes setting up a new International Sustainability Standards Board – “ISSB” under the auspices of the IFRS Foundation is critical to achieve globally consistent sustainability standards that lead to relevant, reliable, comparable, and assurable information. A global approach reduces regulatory fragmentation and the proposed approach leverages a global structure that already has legitimacy.

IFAC's building blocks approach to reporting sustainability information enhances our previously issued roadmap, The Way Forward. IFAC believes that adopting a Building Blocks approach is the only way to reconcile the objectives and demands of all stakeholders and the aspiration of achieving both a global solution for a baseline of consistent information for global capital markets and satisfying the objectives of certain jurisdictions (e.g. the EU) for better reporting on a variety of public policy matters. 

In summary:

  • Block 1 is investor focused sustainability information that is material to/ relevant to enterprise value. We call this the ‘outside-in’ impacts - the impacts of ESG factors on an organization’s short-, medium- and long-term performance. Block 1 information needs to be integrated with existing Financial GAAP reporting to provide a complete picture of enterprise value. IFAC believes a new ISSB should first focus on Block 1, focusing first on climate,  but then turning its attention to all Block 1 issues. 
  • Block 2 is multi-stakeholder focused sustainability reporting that helps a wide range of stakeholders understand a company’s positive and negative contributions to sustainable development and its impacts on economy, environment, and people. What we call the ‘inside-out’ impacts. These are the impacts that an entity has on the outside, but these impacts do not, at least as of now, affect the entity’s performance. The issue with block 2 information is more challenging and the demand for information in this space will in many cases be in response to jurisdiction-specific public policy objectives. Accordingly, for Block 2 there can be an aspirational goal for global standards or guidance (e.g. a new ISSB under the auspices of the IFRS Foundation could help here by facilitating the sharing of approaches and encouraging the coalescing of approaches), but there will likely always be a need for jurisdiction-specific requirements.
2. Encouraging Sustainability-Related Skills and Competencies

IFAC will continue to work with PAOs and through the International Panel on Accountancy Education to demonstrate that professional accountants not only have the skills and competencies needed to prepare, assure, and utilize this information, but also the expertise to build and evaluate necessary controls and processes related to sustainability. In identifying which existing foundational skills can be leveraged to meet new requirements, and in creating access to obtain new subject matter expertise, IFAC supports the positioning that professional accountants are best placed to meet the advisory, preparatory and assurance sustainability-related needs of organizations.

3. Championing an Integrated Mindset

The insight gained from both financial and sustainability-related (or “non-financial”) information is maximized when an integrated approach connects the two. Quite simply, financial and sustainability information are not two, disconnected silos. An integrated approach leads to better decisions that deliver long-term value creation—financial returns to investors while taking account of value to customers, employees, suppliers, and societal interests. Professional accountants working in companies must continue to foster an integrated mindset that connects financial and sustainability data, processes and analysis. IFAC’s Rethinking Value Creation webpage provides case studies of integrated thinking.

4. Advancing Assurance Services

Assurance is a necessary component of the evolving global reporting system and an imperative for our profession. IFAC is undertaking a benchmarking study to better understand current and best market practices, identify gaps, and develop a shared narrative that best positions professional accountants to perform sustainability assurance. We recently published Accelerating Integrated Reporting Assurance in the Public Interest and the IAASB have released new Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting Assurance Engagements.

5. Why are professional accountants best positioned?

As Professor Mervyn King has said, ”Only accountants can save the world!”.

Professional accountants are central to gathering, analyzing, and communicating high-quality information. Our role in sustainability-related reporting—and insights—represents an even greater opportunity to unlock value for companies and clients. We will have to integrate into our work new and diverse subject matters and technologies, but our core knowledge, skills, professional judgment, integrity, and code of ethics (The International Code of Ethics for Professional Accountants) are already in place. The future potential of sustainability information is too important to not get it right; together we will actively make the case that our profession is well positioned to rise to this challenge.

Global Community

IFAC encourages all individuals to advocate on behalf of the profession as preparers, advisors, directors, investors and auditors – whatever your role may be – to make sure advancing sustainability happens the right way and that as a profession we play a leading, proactive role.

Recent key events:

  • September 2020 IFAC issued a call for the IFRS Foundation to create a global sustainability standards board alongside the IASB. In February 2021, IFRS Trustees announced definitive steps towards a decision on whether to announce the establishment of a new global sustainability standards board. IOSCO provided strong support for a global approach overseen by the existing IFRS governance structures.
  • November 2020, SASB and IIRC announced their intention to merge into the Value Reporting Foundation (VRF), further supporting the objective of unified and simplified sustainability disclosures. The VRF will be launched in June 2021.
  • December 2020, five internationally significant framework- and standard-setting institutions (CDP, CDSB, GRI, IIRC, and SASB) published a prototype climate-related financial disclosure standard that also incorporated recommendations from the TCFD.
  • The European Commission has continued to move forward on its Corporate Sustainability Reporting Directive.
  • IFAC submitted a response to U.K. Financial Reporting Council (FRC) Consultation on the Future of Corporate Reporting, targeting recommendations that align future UK reporting changes with development of a global sustainability standards board.
  • The Trustees of the IFRS Foundation (Foundation) has published proposed amendments to the Constitution of the Foundation to accommodate the potential formation of an ISSB.  IFAC intends to respond to the consultation, which is open through 29 July 2021.
Kevin Dancey

Former Chief Executive Officer, IFAC

Kevin Dancey, CM, FCPA, FCA is IFAC’s former Chief Executive Officer (2019-2023).

Mr. Dancey has a long history of leadership in the accountancy profession as well as in public service. As Canadian Institute of Chartered Accountants President and CEO, Mr. Dancey led the Canadian accountancy profession’s unification, becoming CPA Canada’s first President and CEO after the merger. His experience also includes serving as the Assistant Deputy Minister, Tax Policy, at Finance Canada (1993-1995); on the Canadian Auditor General Panel of Senior Advisors (2006-2015); and as an Auditing and Assurance Standards Oversight Committee member (2017-2018) and CCAF-FCVI Inc. board member (2008-2013).

Mr. Dancey’s international accountancy experience includes the Public Interest Oversight Board (2017-2018), the IFAC board (2006-2012) and the Global Accounting Alliance (2006-2016), where he was also Chair from 2008 to 2012.

Prior to joining the Canadian Institute of Chartered Accountants, Mr. Dancey was PwC’s Canadian Senior Partner and CEO and was a PwC Global Leadership Team member from 2001-2005. He was national tax practice leader for Coopers & Lybrand before the merger with Price Waterhouse.

Mr. Dancey previously chaired Finance Canada’s Departmental Audit Committee (ended on December 31, 2022) and was a member of the Advisory Board of the CPA Canada Martin Family Initiative, which mentors Canadian indigenous youth, having previously served as the National Coordinator for the program. He is also a Senior Fellow at the CD Howe Institute, a Canadian research institute dedicated to raising living standards through economically sound public policies.

Mr. Dancey is a Fellow at CPA Ontario, where he first qualified, and a member of CPA Canada. He holds a Bachelor of Arts (Hon.) in Mathematics & Economics from McMaster University (Canada) and an honorary Doctor of Laws from the University of Waterloo.

Mr. Dancey is a member of the Order of Canada.