Canada’s standard-setting Boards and Oversight Councils support efforts to create global sustainability reporting standards, as detailed in recent comment letters to the International Financial Reporting Standards (IFRS) Foundation Trustees.
The letters responded to its Consultation Paper on Sustainability Reporting, which sought to assess demand for global sustainability reporting standards. The Trustees’ proposals included creating an international sustainability standards board and focusing initially on climate-related financial disclosures.
What follow are key takeaways from the comment letters submitted by Canadian standards Boards and Councils with links to the full documents.
Auditing and Assurance Standards Board (AASB)
In addition to a robust standard-setting process and ensuring multi-stakeholder input (such as assurance experts), the AASB emphasizes that appropriate technical expertise is needed for this project. “The IFRS Foundation will need to have or engage expertise beyond its current discipline of financial reporting to also include expertise on sustainability-related subject matter information reporting.”
The AASB also supports sustainability reporting being auditable. It voiced concern over widening expectation gaps if auditors report different levels of assurance when using sustainability information versus financial statements.
Read the AASB’s letter in full.
Public Sector Accounting Board (PSAB)
PSAB supported the initiative but noted the consultation paper didn’t directly address the public sector. The Board strongly encourages “that any future action on sustainability reporting be a global, joint private sector-public sector effort.”
“Consideration of the public sector in setting sustainability reporting standards may at a minimum reduce inconsistencies in reporting requirements across sectors and ensure use of a common language and consistent unit of measure for sustainability reporting,” writes PSAB chair Clyde MacLellan.
PSAB indicated a willingness to consult with the IFRS Foundation on integrating the public sector into sustainability ventures.
Read PSAB’s letter in full.
Accounting Standards Board (AcSB)
The AcSB encourages the Trustees to think beyond climate-related matters when considering the scope for a sustainability board, and to go “beyond sustainability to other types of non-financial information” or metrics at the appropriate time.
The AcSB also expresses a need for scalability to ensure the broadest global acceptance. Like PSAB, it also noted the high number of domestic public sector entities, which require consideration when applying future standards in Canada. The Board also noted “metrics might need to be more industry specific, focus on how management makes decisions and information material to enterprise value creation, as users are seeking this data for their decision making.”
Read the AcSB’s letter in full.
Auditing and Assurance Standards Oversight Council/Accounting Standards Oversight Council (AcSOC/AASOC)
In their joint response, AcSOC and AASOC note a “major shift in favour of sustainable finance” in Canada. The Councils urge a comprehensive approach recognizing the linkages between environmental, social, and governance factors.
They also stressed the importance of fast action, urging that “the IFRS Foundation needs to think in terms of months not years.”
Sustainability standards must be primarily grounded in the needs of capital providers, but also those of other stakeholders as standards evolve. The Councils also noted the need for quality and due process as new international standards are set.
Read the joint letter in full.