As shareholders, employees and other stakeholders bring ESG to the fore, directors and management have lamented that there are no consistent, measurable standards by which to measure corporate efforts and advancements.
The Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) have worked separately on ESG reporting standards, creating the Integrated Thinking Principles, Integrated Reporting Framework and SASB Standards for a decade. Those guidelines were similar, but conflicting language kept the three different from one another.
On Wednesday, officials announced the merger of SASB and IRC to form the Value Reporting Foundation. The new organization will work to integrate the three resources using a common language.
“By more closely aligning the Integrated Reporting Framework and the SASB Standards,” says Value Reporting Foundation CEO Janine Guillot, “the Value Reporting Foundation will make it easier for businesses to communicate their long-term strategy and provide a more comprehensive view of business performance to investors and other providers of capital.”
Guillot was formerly the CEO of SASB. Charles Tilley, former CEO of IIRC, is co-chair of the foundation.
Guillot says that while accounting standards took decades to develop, the foundation expects an accelerated timeline that will have concrete results in one to three years.
Environmental sustainability and climate change were largely discussed during a press conference announcing the completion of the merger. However, Guillot says, all aspects of ESG are on parallel tracks for standards development.
She used human capital sustainability as an example, citing the areas of diversity and inclusion, job quality and intellectual capital as just a few areas under assessment.
“The ESG system is missing foundational standards,” Guillot says. “This will be the gravel under the road.”