Last week I attended the IFRS Sustainability Symposium in Montreal, proudly representing Earth Academy – education partner of IFRS Foundation. It was a busy event that started with a 2-hour networking drinks on Thursday evening where I met many like-minded people.
It was great to see a huge number of people who joined the event, maybe more in-person attendance than what IFRS colleagues initially expected. This also indicates the importance of the work that IFRS is doing in the direction of sustainability standards.
Here are the key take-aways from the conference:
- Quoting Emmanuel Faber – “Our road to sustainability does not stop at standard setting. It goes to capacity building. The second vice chair of the ISSB Board Jingdong Hua is particularly focusing on capacity building”. I was excited to see this commitment from International Sustainability Standards Board (ISSB). The number of times the words ‘capacity building’ and ‘training’ were used was incredible. Being in the field of capacity building for more than 15 years, I understand the planning and strategic thinking that will be needed in this direction. The Standards are only as valuable as its uptake. Earth Academy is looking forward to contributing towards the uptake and adoption of IFRS Sustainability Standards.
- It was announced that the ISSB is now moving towards the balloting process for the IFRS S1 (General requirements standard) and IFRS S2 (Climate-related disclosures standard). This means that the first two IFRS Sustainability Standards will be released by June 2023. The effective date of the two standards was decided to be January 2024. As the ISSB board recruitment was finalized in December 2022, with the full team working in this direction, the next set of standards will be developed much faster.
- In the discussion between Sue Lloyd and Mark Carney – Mark stressed on the importance of the standards to be developed ‘by the market and for the market’. He also mentioned the importance of integrating the TCFD’s 4 pillar architecture in the IFRS Standards which highlights the board level responsibilities for the companies in managing ESG topics.
- The importance of ‘scenario analysis’ was discussed but at the same time it was acknowledged that this is the weakest area for the companies at the moment. The biggest challenge for the companies is that the coherent scenarios are largely oriented towards policy makers and not tailored to individual business. Therefore, companies find it quite challenging to include quantitative information related to scenario planning. In the absence of quantitative information, it is advisable to start with qualitative information and mature towards integrating the quantitative information as part of the sustainability journey of the companies.
- The most important comments to the Exposure Drafts of S1 and S2 were also discussed. Reporting sustainability information together with the financial information would be challenging. @Yasunobu Kawanishi, the chair of Sustainability standards of Japan mentioned that Japanese companies are expected to provide their financial information within three months from the reporting period. Aligning their sustainability information within this timeframe would be very resource intensive for the companies. Importance of estimations for reporting was also discussed in this regard. While the importance of ISSB Standards for financial materiality was discussed, it was great to hear Elisa Cencig, PhD Cencing of Norges Bank Investment Management acknowledging that ISSB and Global Reporting Initiative (GRI)use for them is complimentary for assessing their financial and impact materiality.
- In the session related to Global baseline for sustainability, Martin Moloney from IOSCO mentioned that a lot of jurisdictions are looking at work of ISSB and how that can be used as a baseline to get first-movers advantage. It was great to hear Abigail Ng, Monetary Authority of Singapore, talk about ISSB Standards being the first step and baseline for the Singapore companies. TCFD aligned reporting is already made mandatory for the listed companies in Singapore for specific sectors. Looks like Singapore will be one of the faster moving jurisdictions in this area. Again, capacity building was highlighted by Abigail as a very important step as Singapore has majority of SMEs and providing guidance and capacity building for them cannot be underestimated.
- In the session about ‘levelling up the reporting chain’ which was moderated by Dr Nnoli-Edozien, ISSB member, it was wonderful to hear the importance of capacity building in the Emerging Markets. Focus on African, Asian and South American markets will help in bringing transparency in the value chain of large companies. Kathlyn Collins, CAIA from Matthews Asia explained the importance of their work with the portfolio companies in Asia – specifically India and China to make them transparent.
- The last session on ‘How integrated reporting supports putting sustainability performance in business context’ was moderated by HIROSHI KOMORI, ISSB member. It was discussed that Integrated reporting is the link between IASB and ISSB. The management commentary from IASB is connected with the principles in the IIRC Framework. Hiroshi also mentioned that ‘The concepts of integrated reporting, integrated thinking and value creation are important if we want to look at the long-term strategy’.
Finally, I want to acknowledge the contributions of Nicolai Lundy, Mardi McBrien, Maren Meyers and all ISSB and IFRS staff in making this conference a success! Coming back from this conference, Earth Academy is even more strongly committed to play its part in capacity building and uptake of the IFRS Sustainability Standards – which was highlighted many times during the conference.
