{"id":1471,"date":"2021-03-11T03:31:26","date_gmt":"2021-03-11T02:31:26","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/blog\/blog\/eu-v-ifrs-fundamentally-different-approaches-sustainability-reporting\/"},"modified":"2022-10-19T08:39:07","modified_gmt":"2022-10-19T06:39:07","slug":"eu-v-ifrs-fundamentally-different-approaches-sustainability-reporting","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2021\/03\/11\/eu-v-ifrs-fundamentally-different-approaches-sustainability-reporting\/","title":{"rendered":"EU V IFRS: Fundamentally different approaches to sustainability reporting"},"content":{"rendered":"

Main points: <\/strong>The IFRS Foundation and EU\/EFRAG approaches are opposed in all key aspects; The EU\/EFRAG approach is likely to contribute to addressing sustainable development (including climate change). The IFRS Foundation approach is likely to be a distraction from it; The IFRS Foundation has the backing of IOSCO, but the EU has legislative powers.<\/p>\n

A couple of days ago, I received a brief email update from the IFRS Foundation on their\u00a0approach\u00a0<\/a>to Sustainability Reporting Standard Setting and a 228-page\u00a0document\u00a0<\/a>from the European Financial Reporting Advisory Group (EFRAG) on theirs.\u00a0 The latter contains 54 proposals and supporting information.\u00a0 The IFRS Foundation have yet to provide the analysis supporting their approach. (They also did\u00a0not provide<\/a>\u00a0evidenced analysis supporting the proposals in their initial Consultation Paper.)<\/p>\n

The relative rigour through which the proposals have been arrived at is perhaps the reason for significant differences on all key aspects of approach:<\/p>\n\n\n\n\n\n\n\n\n\n\n
<\/td>\nIFRS Foundation<\/strong><\/td>\nEFRAG<\/strong><\/td>\n<\/tr>\n
Audience<\/strong><\/td>\nInvestors<\/td>\nAll users of sustainability reporting and affected stakeholders, including with respect to potential future impacts<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
Scope<\/strong><\/td>\nClimate first, then other ESG matters<\/td>\nSustainable development issues \u2013 including the impact of an organisation\u2019s products and services and its broader value chain.<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
Materiality<\/strong><\/td>\nInformation material to investors, lenders and other creditors<\/td>\nDouble materiality \u2013 including material impact of an organisation on sustainable development.<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
Foundations<\/strong><\/td>\nTCFD recommendations and the\u00a0(conceptually flawed) prototype standard<\/a><\/td>\n\u2018Overarching principles\u2019 to i) support an inclusive range of stakeholders; and ii) be principles-based.
\nBuild on initiatives that have similar goals<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The IFRS Foundation have been silent on several key matters that the EFRAG report further commits to.\u00a0 This includes EFRAG commitments to:<\/p>\n