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Moving Towards International Sustainability Reporting Convergence

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Coordination among different international standards is difficult but demanding, especially for multi-national corporates. Last year, the The European Financial Reporting Advisory Group (EFRAG) and GRI (Global Reporting Initiative) signed landmark statement of cooperation on July 8, 2021. Two groups announced working plans towards international sustainability reporting convergence, EFRAG Project Task Force on European sustainability reporting standards (PTF-ESRS).

As a private association established in 2001 with the encouragement of the European Commission to serve the public interest, EFRAG extended its mission in 2022 following the new role assigned to EFRAG in the proposal for a CSRD of 21 April 2021, providing Technical Advice to the European Commission in the form of fully prepared draft EU Sustainability Reporting Standards and/or draft amendments to these Standards. Currently, EFRAG is in process of implementing the sustainability reporting governance structure including the technical bodies aiming to be operational by the end of March 2022.


This year, the IFRS Foundation and GRI announced plans to align capital market and multi-stakeholder standards on March 24, 2022. The IFRS Foundation and GRI have announced a collaboration agreement under which their respective standard setting boards, the International Sustainability Standards Board (ISSB) and the Global Sustainability Standards Board (GSSB), will seek to coordinate their work programmes and standard-setting activities.

The IFRS Foundation, which announced at COP26 the establishment of the ISSB to develop a comprehensive global baseline of investor-focused sustainability disclosures for the capital markets, and GRI, the leading global standard-setter for multi-stakeholder focused sustainability reporting, further announced that they will join each other's consultative bodies related to sustainability reporting activities.

The GRI Standards are continually reviewed, with current developments including new Sector Standards and an updated Biodiversity Standard. Such alignment between the IFRS and GRI, to create an interconnected approach for sustainability disclosures may be a sign that the EU among other regions is ready to move towards incorporating IFRS as the mainstream framework for mandatory ESG reporting. Nonetheless, such motion towards unified sustainability reporting standards is merging, with the ISSB in the lead.

Furthermore, the International Sustainability Standards Board (ISSB) published draft sustainability-related and climate-related disclosure requirements for public comment on March 31.

Latest Development from ISSB

The draft climate-related requirements would make companies disclose their climate governance, strategy, and risk management processes. It would also mandate the publication of general and industry-specific metrics and targets, including absolute Scope 1, 2, and 3 emissions.

The purpose of the standard is to provide investors with the information needed to understand how climate-related risks and opportunities could impact a company’s enterprise value and gauge its ability to adapt accordingly. The public comment period for the draft standards closes on July 29. The ISSB then plans to review feedback and publish a finalised set by the end of the year. 

The requirements proposed by the International Sustainability Standards Board (ISSB) in the Exposure Draft Climate-related Disclosures (the Exposure Draft) are consistent with the four recommendations and 11 recommended disclosures published by the Task Force on Climate-related Financial Disclosures (TCFD). Areas where the Exposure Draft differs from the TCFD recommendations reflect differences between the Exposure Draft and the TCFD’s guidance, not the TCFD’s core recommendations or recommended disclosures.

Key Differences between the Exposure Draft and TCFD, according to the ISSB:

• uses different wording to capture the same information as the TCFD recommendations (some instances);

• requires additional, more granular information that is in line with the TCFD recommendations (few instances); and

• differs substantively from the TCFD guidance—but not the TCFD overall recommendations—mainly by proposing some additional specific disclosures (very few instances).


The International Organisation of Securities Commissions (IOSCO) has adopted its 2022 work plan on March 14, 2022, to develop sustainable finance, one of which is to undertake an in-depth analysis of the ISSB’s proposed climate standards, to inform its decision on whether to endorse these standards.

GC Insights

We are looking forward to the development and enhancement of the ISSB with collaborations from multi-stakeholders. Besides alignments towards TCFD Recommendations, the EU Commission stress its position towards double materiality when pushing forward the sustainability reporting requirements. In its new guidelines on reporting climate-related information published back in 2019, it encourages a company to judge materiality from two perspectives (European Commission, 2019):

1) “the extent necessary for an understanding of the company’s development, performance and position” and “in the broad sense of affecting the value of the company”;

2) environmental and social impact of the company’s activities on a broad range of stakeholders.

The GRI also adopted such double materiality application in its approach to materiality. The announcement between the IFRS Foundation and GRI to align capital market and multi-stakeholder standards is much needed to see the emerging approaches among the development of ESG and sustainability reporting and trends in moving towards international sustainability reporting convergence.

EFRAG & GRI landmark Statement of Cooperation:

IFRS Foundation and GRI to align capital market and multi-stakeholder standards:


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