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IFRS consultation on sustainability reporting

Sustainable Finance | Sustainability reporting (NFRD)
19 March 2021 | Policy position
Sustainable Finance
Sustainability reporting (NFRD)

EFAMA shares the urgent need to improve the consistency and comparability of sustainability reporting at a global level. We believe this is a crucial enabling factor to the success of the global efforts to mainstream sustainability in the financial sector. A global set of internationally recognised sustainability reporting standards would help establish an effective chain of information from corporates to the benefit of investors.


The growing demand for sustainability reporting standards has translated into a fragmented landscape of different public and private frameworks, each addressing different needs and presenting different approaches or specifications. As a result, the information provided by companies lacks comparability and usefulness for the wide variety of users they seek to satisfy. This limits the ability of investors to integrate sustainability considerations in their decisions. At the same time, compliance with the transparency rules introduced for asset managers is significantly challenged by the lack of appropriate data to meet these requirements. We support initiatives that seek to establish consistency. Most importantly, we support initiatives that build on existing, well-established standards. The consultation paper fittingly refers to the joint initiative of leading sustainability and integrated reporting organisations CDP, CDSB, GRI, IIRC and SASB (the so-called “group of 5”), as well as the work of the TCFD.


In this context, we agree that there is an urgent need to ensure consistency and there are merits with institutions with expertise on reporting standards at global level coming together to build a framework that can help meet the current challenges. We would therefore see the IFRS suggestion providing an added value as long as the criteria and conditions outlined hereafter are met.




The consultation paper identifies the essential conditions that the framework should meet to be effective. In our feedback, we wish to build on those points and stress the following requirements:


  • To ensure legitimacy and broad support from financial market participants, the IFRS Foundation’s three-tier governance structure would have to be substantially revised to ensure it is centred around the needs of the investment community, which plays a crucial role in linking corporates with the suppliers of capital, and ensuring the latter are provided with meaningful and comparable information to support their investment decisions.


  • We wish to stress that ensuring global support from policymakers is a prerequisite, in particular for those jurisdictions that have already taken enhanced regulatory actions towards sustainability reporting and disclosure requirements. As noted in the consultation paper, the European Union has taken a leading role in the development of sustainability reporting, including by establishing the International Platform on Sustainable Finance for international coordination. Through the development of an ambitious and comprehensive sustainable finance framework, the EU can count on unparalleled knowledge and expertise in the area of sustainability reporting.


  • We, therefore, believe that the IFRS Foundation should seek close cooperation with EU authorities, reflecting this in regular outreach programmes and the geographical composition of the SSB, and to build a framework that is fully compatible with the work carried out by the European Commission and the EFRAG’s project task force developing an EU standard.3 / 6


  • The Foundation should ensure the reporting standards are fit for purpose for investment decisions. The framework should be based on decision-useful information and ensure that data are measurable, transparent and comparable, adopting a ‘climate-first’ approach to build on more robust metrics and methodologies for environmental reporting, but gradually broadening the scope of information to other environmental and social factors. The priority should be reaching a common definition of the underlying environmental metrics.


  • Globally consistent reporting standards should be based on existing frameworks that are extensively used and have a proven track record for investee companies and investors. It is critical to start from well-established reporting standards that have proven their effectiveness to support investment decisions, such as the group of 5 and the TCFD.
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