IIRC/SASB Merger Complete, New Value Reporting Foundation Takes Flight

By:
Chris Gaetano
Published Date:
Jun 9, 2021
GettyImages-sustainability-1068050202

The Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) announced the completion of their merger into the new Value Reporting Foundation (VRF), which as of today has become a fully fledged organization of its own.

The merger, announced late last year, combined the SASB's library of industry-specific reporting standards with the IIRC's integrated reporting framework. It will be led by Janine Guillot, previously the head of SASB, as CEO and by Charles Tilly, who previously served as CEO of the IIRC, as chair. In a recent interview with The Trusted Professional, AICPA CEO Barry Melancon, who had chaired the IIRC prior to the merger, said that the merger was motivated partially by the synergy between the two organizations and partially by what was seen as the need to, in his words, "rationalize" the environmental, social and governance (ESG) reporting space.

"There are just too many different models, standards, criteria frameworks. There are hundreds, really. If I'm an investor, if I am a business leader, there are so many different things to choose from," he said at the time.

The Trusted Professionaexplored this issue in a 2019 series on the ESG reporting movement's growing pains. The multiplicity of organizations in this space, sources said, has served to reduced comparability between reports and, therefore, blunt their overall usefulness. Considering the general lack of mandates in this arena, the wide variety of accounting methods can also serve to let companies pick and choose whatever will make them look best.

Unlike organizations such as the Global Reporting Initiative, which leans a little closer to the multistakeholder-oriented civil society approach, the VRF is concerned mainly with communicating how ESG factors affect a company's performance so that investors can make better decisions about them. CEO Guillot, in the recent Trusted Professional interview, said that the VRF's approach might be better understood as "enterprise value reporting," where ESG factors are one of the many things that can influence the value of a company and its activities.

The formation of the new entity comes at a time when the International Financial Reporting Standards Foundation (IFRS Foundation) is likely to form a board of its own Sustainability Standards Board, also with a focus on enterprise value reporting rather than traditional corporate sustainability. While a final decision on whether to form this new board has yet to be finalized, the IFRS Foundation is nonetheless seeking a chair who could lead it. It also comes shortly after a coalition of ESG organizations, including the SASB and IIRC, announced a joint venture to converge their multifarious frameworks and standards to allow for better interoperability. In the Trusted Professional interview, neither Melancon nor Guillot felt the merger disrupted either of these developments: the VRF does not intend to compete with whatever the IFRS Foundation comes up with, and further it will continue work with the coalition on the initial joint initiative.

Guillot, in a statement, said that she was confident that the VRF would bring progress to the ESG reporting space over the long term, which will be good for the investing community.

“We have listened to the strong demand from businesses and investors for a simplified corporate reporting landscape," she said. "By combining the tools, resources and relationships of SASB and IIRC, the Value Reporting Foundation will continue to advance progress towards a more coherent landscape and continue to support the important efforts of the IFRS Foundation. The end result will be comparable, consistent and reliable information that enables more holistic decision making by businesses and investors." 

The SASB and IIRC may not be the only entities to merge into the new foundation. Other organizations might also be incorporated some time in the future. The Climate Disclosure Standards Board and the VRF have already jointly signaled interest in perhaps merging as well.

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