The IIRC and SASB merge to become the Value Reporting Foundation - message from the CEO

Published on July 02, 2021



Last week we announced the merger of the IIRC and SASB into the Value Reporting Foundation, an organization I am thrilled to lead as CEO. I’d like to share more about the Value Reporting Foundation’s purpose and how the Foundation fits into the global corporate reporting landscape.

This is a momentous year for advancing comprehensive corporate reporting, with multiple leading global forces making significant steps forward. 

Let me start by telling you why the IIRC and SASB decided to merge. Business and investors have long asked for more clarity and simplicity in the corporate reporting landscape. Our merger is a direct response to this call. By combining our tools, resources and relationships, the merger also better positions us to support key bodies such as the IFRS Foundation—and continue to work with our colleagues around the world—to drive progress towards a more coherent, comprehensive corporate reporting system.

The Value Reporting Foundation will operate as one global organization with a unified strategy. We aim to help businesses and investors develop a shared understanding of drivers of enterprise value and how value is created, preserved or eroded over time. We support business and investor decision-making with three key resources: Integrated Thinking Principles, Integrated Reporting Framework and SASB Standards. These tools, already adopted in over 70 countries, comprise the 21st century market infrastructure our world needs by making it easier for businesses to communicate long-term strategy and provide a comprehensive view of corporate performance to investors and other providers of capital.

The Integrated Reporting Framework and the SASB Standards are already complementary tools, and many companies already use them together. The Integrated Reporting Framework provides principles-based guidance for report content, while SASB Standards provide industry-specific disclosure topics and metrics for use in an integrated report. There is already close alignment between the Integrated Reporting Framework’s capitals and SASB’s sustainability dimensions and over time we intend to fully harmonize them. This will make it easier for businesses to use the Integrated Reporting Framework and SASB Standards together.

Now, let me talk about how the Value Reporting Foundation will operate within the global reporting landscape. As I mentioned, this is a momentous year for advancing sustainability disclosure.

The IFRS Foundation has announced preliminary plans to develop an International Sustainability Standards Board, also known as the ISSB. We believe the IFRS Foundation is uniquely positioned to establish legitimacy around sustainability disclosure standards for global capital markets, just as it did for financial reporting. The Value Reporting Foundation is participating in the IFRS Foundation’s Technical Readiness Working Group to inform plans for the ISSB.

In addition to the IFRS effort, the European Commission is moving rapidly. The European Commission has taken significant steps to drive sustainability reporting forward through its Corporate Sustainability Reporting Directive and Sustainable Finance Disclosure Regulation. These Directives are having global impact and catalysing global progress. 

The US SEC has invited public consultation on climate disclosure and is also sending signals about openness to international cooperation. 

Luckily, there is a solid foundation of work on which all these efforts can build. Last fall, SASB and the IIRC collaborated with three other leading organizations – CDP, CDSB and GRI – to publish a shared vision for a comprehensive corporate reporting system that includes both financial accounting and sustainability disclosure, connected via integrated reporting. The IIRC and SASB merger grew out of this important collaboration from the “group of five.” We were very pleased to see that many of the responses to the IFRS consultation regarding the ISSB referenced the “group of five” work.

I’d like to spend a moment talking about why we need a global system for corporate disclosure. Sustainability information serves a broader array of stakeholders—including employees, customers, civil society, policy makers and investors—than traditional financial reporting. 

And, as described in the EU’s “double materiality” concept, there are two lenses through which these different types of stakeholders can view ESG issues.  One lens is how sustainability issues affect a company’s financial performance and long-term enterprise value. Another lens is how a company’s activities impact society and the environment. Both lenses are valuable and important. 

In addition, sustainability issues transcend international borders. However, different jurisdictions have unique regulatory mandates and legal frameworks which govern corporate disclosure.

So, simplifying the ESG disclosure landscape — which both companies and investors decry as the “alphabet soup” — is complex. But it isn’t impossible. We believe the solution is a “building block” approach. One building block is a baseline set of global standards, focused on how sustainability issues impact enterprise value, and targeted at disclosure to investors and other providers of capital. This building block would be focused on meeting the baseline information needs of global capital markets. We believe the resources developed by both IIRC and SASB over 10 years can contribute to this solution under the auspices of the IFRS Foundation.

Together as the Value Reporting Foundation—with combined tools, resources and relationships of IIRC and SASB —we can support key leaders in making progress toward a simplified corporate disclosure landscape.

We envision a future in which a coherent, comprehensive system of corporate reporting helps bring the interests of businesses, investors, and broader society into close alignment. 

SASB & IIRC both celebrated their first 10 years of success last year. Both organizations broke tremendous ground in their first decade. Together, as the Value Reporting Foundation, we can go further and faster in the next decade.