The International Organisation of Securities Commissions (Iosco) has called on regulators to exercise oversight of providers of environmental, social and corporate governance (ESG) ratings and data products. In detailed guidance, Iosco stated: ‘Their significance and usefulness will only continue as capital markets intensify efforts to support the shift towards a net-zero economy.’ It said ESG information suppliers and assessors should consider, among other good practice steps: being transparent about the methodologies they use; implementing written policies and procedures for how they use non-public information; and avoiding, mitigating and disclosing conflicts of interest.
The European Financial Reporting Advisory Group (Efrag) and GRI (Global Reporting Initiative) are aligning global and European sustainability reporting by working together to develop new biodiversity standards. Efrag will make a draft European Union standard available to the European Commission in June 2022, while GRI has pledged to release an updated GRI biodiversity standard in the second half of 2022. Efrag and GRI will join each other’s technical expert groups, share information, align work plans and adjust timelines to improve interoperability.
The International Federation of Accountants (IFAC) has released a blueprint for delivering trusted sustainability disclosures, saying they must be subject to high-quality, independent, external assurance. Along with the key credibility-enhancing element of assurance, IFAC’s advice stresses the importance of global standards, regulations that encourage disclosures that support decision-making, and an interconnected approach to sustainability and financial information reporting.
IFAC’s Professional Accountants in Business advisory group has released a report exploring how accountants can boost value creation and sustainability, including the potential opportunities offered by digital assets. A key takeaway is that an integrated approach to financial and sustainability-related information under the remit of the CFO leads to better decisions that deliver long-term value to stakeholders and society, while ensuring financial returns to investors.
Another report from IFAC explains how small businesses can benefit from accurate sustainability information. It also highlights the emerging sustainability services that practitioners can provide, including advisory, reporting, agreed-upon procedures engagements, and assurance.
The Value Reporting Foundation has released a new set of six integrated thinking principles designed to help unlock the full value of an organisation’s intangibles and communicate that to investors. The principles lay out a structured approach that will deliver stronger governance and better management, underpinned by integrated decision-making and a holistic approach to resource allocation that balance short-term performance needs with a longer-term approach to value creation and preservation.
Iosco’s growth and emerging markets committee is asking for feedback on a report on how emerging market jurisdictions should establish and promote innovation facilitators, such as innovation hubs, regulatory sandboxes and regulatory accelerators. The four proposed recommendations include how to define the objectives and functions of such facilities, and how they should cooperate and exchange information with other development agencies at home and abroad.
The International Accounting Standards Board (IASB) is proposing changes in disclosure requirements to increase the transparency of supplier finance arrangements. The IASB wants to amend IAS 7, Statement of Cashflows, and IFRS 7, Financial Instruments: Disclosures, to require companies to disclose such data so that investors can assess the impact of reverse factoring on company liabilities and cashflows.
The IASB has also proposed changes to IAS 1, Presentation of Financial Statements, to require companies to provide better information about long-term debt with covenants that allow settlement to be deferred for 12 months or more after a reporting date. The suggested change would mean that covenants with which a company must comply after the reporting date do not affect the classification of a liability as current or non-current at that date. Such non-current liabilities would have to be noted separately from other non-current liabilities in accounts, and information about the covenants would have to be declared in the financial statement notes.
The IFRS Foundation has proposed changes to its technical guidance on how accountants follow IFRS Standards taxonomy so that data is more interoperable. The changes include updates to XBRL data specifications, the use of safer ‘https’ rather than ‘http’ web addresses, and changes to reference URI (uniform resource identifier) links pointing to particular data pages.
The technology working group of the International Auditing and Assurance Standards Board (IAASB) has issued advice on how auditors should use automated tools and techniques to plan an audit under ISA 300, Planning an Audit of Financial Statements.