From a focus on climate change to a push for diverse corporate boards, ESG matters - those related to environmental, social and corporate governance - have become the focus of corporations and investors alike.  Regarding ESG-related disclosure standards in particular, investors and corporations are both anxious to adopt and challenged to choose a standard that is both comprehensive and relevant to the respective company or industry.

Though the CDP (formerly the Carbon Disclosure Project), Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) have gained a great amount of attention and influence in recent years, they often appear to be multiple attempts toward the shared goal of integrated and comprehensive sustainability reporting.  Investors and corporations alike have called for simplifying corporate reporting in this space.

In September 2020, all five of these framework and standard-setting institutions issued a joint statement reflecting a vision to develop a comprehensive global corporate reporting system for sustainability disclosure.  While that statement did not specify the precise form of such collaboration and did not include a specific timeframe, a recent announcement brought this vision one step closer to actualization.

On November 25, SASB and IIRC announced their intention to merge into a single organization called the Value Reporting Foundation.  IIRC's focus is to help companies integrate sustainability topics into financial reporting while SASB's focus is to specify the sustainability topics that should be disclosed according to industry.  The purpose behind the intended merger is to provide a comprehensive reporting framework across enterprise value drivers and standards for global sustainability performance.

The IIRC and SASB standards will continue to function as corresponding tools, but the Value Reporting Foundation will assist companies in utilizing these standards jointly.  Leadership of both entities will work together on the integration of the two frameworks.  The entity will be international in presence with headquarters to be located in San Francisco and London, and staff around the world.  The new entity is expected to be formed by the middle of next year.

The announcement also contemplates the possibility of additional institutions joining in the future.  It may just be a matter of time before integrated reporting and sustainability disclosure matches the level of precision of financial accounting and disclosure.

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