IFRS Foundation plans ISSB offices in Germany

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The International Financial Reporting Standards Foundation is moving closer to establishing an International Sustainability Standards Board, signing a memorandum of understanding on Wednesday to establish an ISSB office in Frankfurt, Germany.

IFRS Foundation trustees signed the Memorandum of Understanding with German public and private sector institutions to formalize partnerships and funding arrangements for the new board, which will bring together some of the existing environmental standard setters , social and governance (ESG) to agree on a common set of standards.

At the UN Climate Change Summit COP26 in Glasgow, Scotland last November, the IFRS Foundation – which also oversees the International Accounting Standards Board – officially launched the ISSB and announced that the Value Reporting Foundation and the Climate Disclosure Standards Board would be consolidated. in the new ISSB (see the story). The Value Reporting Foundation itself grew out of the merger last year of the Sustainability Accounting Standards Board and the International Integrated Reporting Council. On Wednesday, the SASB Standards Board of the VRF held its penultimate meeting before being absorbed into the ISSB in June to discuss its progress on some of its remaining projects.

Financial regulators have lobbied various standard setters to harmonize sometimes conflicting sets of standards and frameworks as the popularity of ESG funds continues to grow and the pace of climate change accelerates. The United Nations Intergovernmental Panel on Climate Change has published a report report this week which revealed that the impacts of global warming have become almost irreversible and that more than 40% of the world’s population is very vulnerable to its effects.

The decision to establish an office in Frankfurt for the ISSB is another part of the process of establishing the board after it announced in recent months that Danone chairman and CEO Emmanuel Faber will be chairman. of the ISSB, IASB Vice-Chair Sue Lloyd will be the ISSB Vice-Chair. President, and VRF CEO Janine Guillot will serve as Special Advisor to the ISSB CEO.

“The creation of a permanent presence in Frankfurt, and soon in Montreal, are important steps on the way to building our global multi-site model,” Faber said in a statement on Wednesday. “These offices will play a key role as the ISSB embarks on its ambitious program of work. We have a lot to do.

The main offices will be in Frankfurt and Montreal. The ISSB also plans to establish a presence in Asia-Oceania. “Formalizing our collaboration with public and private institutions in Germany will allow us to establish the Frankfurt office of the ISSB, which, together with Montreal, will host key functions and facilitate engagement and cooperation with stakeholders. regions,” said Erkki Liikanen, Chairman of the Trustees of the IFRS Foundation. in a report.

The signatories of the Memorandum of Understanding with public sector institutions are the Federal Government of the Federal Republic of Germany and the Land Government of Hesse, the cities of Frankfurt am Main and Eschborn. The signatories of the Memorandum of Understanding with private sector organizations are Deutsches Aktieninstitut eV, Deutsches Rechnungslegungs Standards Committee eV, Frankfurt Main Finance eV, Institut der Wirtschaftsprüfer in Deutschland eV and Wirtschaftsförderung Frankfurt GmbH.

The IFRS Foundation Trustees previously announced that Montreal will also host key ISSB functions and act as a hub for the Americas region, enabling close cooperation with the San Francisco office, where the VRF is headquartered. social. Consolidation of the VRF into the IFRS Foundation is expected to be completed by June 30, 2022.

“I understand that the main offices will be in Frankfurt and Montreal, said Jeffrey Hales, chairman of the SASB Standards Board, at a press conference after the VRF meeting on Wednesday. “Frankfurt will be the office of the president of the ISSB, but Montreal will be another key office. But the Value Reporting Foundation has staff in San Francisco, but also in London and other cities as well. There are still a lot of loose ends to iron out, but this is definitely a multi-site presence. The entire Value Reporting staff, not just the research team, is working with the IFRS Foundation to ensure a smooth transition. I don’t know if we’re clear on whether there will be moves or not, but there will definitely be a lot of additional hiring that will need to be done for the ISSB to grow its capacity. »

The SASB Standards Board met to discuss its ongoing projects on raw material sourcing in apparel, plastic risks and opportunities, particularly for single-use plastics, and content governance in the media and Internet services industry. The UN report, however, adds additional urgency to the work on environmental measures.

“When I think of the last IPCC report from the UN, it’s just another reminder that the science has been clear on this, and there are still concerns about the pressing aspects of climate change,” Hales said. . “We certainly understand that this is a significant issue. We suspect this will continue to engage governments and industries as well as consumer opinion and hopefully lead to the kinds of changes we believe are needed for businesses to operate sustainably over the long term. As serious as these things are, we continue to see in 2020, 2021 and now in 2022 how social issues can regularly and consistently show up as very pressing as well. It’s just a reminder that sustainability isn’t really separable. Environmental issues are inseparable from social issues, and social issues are not really separable from environmental issues, and the governance of each of them is really important.

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