Value Reporting Foundation adds Integrated Thinking Principles and SASB standards

The Value Reporting Foundation released a set of Integrated Thinking Principles and updated Sustainability Accounting Standards for three different industries.

The group includes the recently combined Sustainability Accounting Standards Board and the International Integrated Reporting Council, which finalized their merger in June, and now plans to be folded into the International Sustainability Standards Board by next June (see story). For now, the group is moving forward on its existing standard-setting, although it appears to be trying to wrap up its work by issuing the first major standards update since 2018.

The new Integrated Thinking Principles offer a structured approach for considering how to create the right environment within an organization, as well as for reviewing what can, at times, go wrong. On the SASB side, the foundation also published updates to its standards for asset management and custody activities, metals and mining, and the coal operations industry. “We recently announced the consolidation of the Value Reporting Foundation with the IFRS Foundation (expected to be complete in June 2022), which will help inform the creation of the new International Sustainability Standards Board,” said Value Reporting Foundation CEO Janine Guillot in a statement Monday. “As we prepare for this consolidation, we continue to advance work on our three key resources: the Integrated Thinking Principles, Integrated Reporting Framework and SASB Standards. We strive to ensure these resources are as useful as possible to the markets they were designed to serve.”

The Value Reporting Foundation’s prototype Integrated Thinking Principles are designed to be embedded into an organization’s business model and applied across key activities overseen by the board and managed by the senior leadership team. The six interconnected principles are supposed to be implemented on three levels: questions to the board and CEO on how widely each principle has been adopted across the organization; the opportunity to test how deeply the principles have been embedded into the organization; and strategic management tools, practices and processes for integrated thinking.

The Value Reporting Foundation also announced updates to three of tis industry standards. As a result of the Tailings Management in Extractives project, updates were issued to the Metals & Mining Standard and the Coal Operations Standard. The updated standards include a new disclosure topic related to the management of tailings storage facilities and new metrics in the waste management disclosure topics. The updates aligned with existing efforts, including the Global Industry Standard on Tailings Management. As a result of the Systemic Risk in Asset Management project, the Systemic Risk Management disclosure topic and its associated metrics were removed from the Asset Management & Custody Activities Standard.

The updated Standards can be found here. The SASB Standards Board also released a Basis for Conclusions document explaining its rationale for the updated standards, which can be found here for metals and mining and coal operations, and here for asset management. The updated versions of the standards are for reports covering annual periods starting on or after Jan. 1, 2022.

“We maintain the SASB Standards through an iterative project-based model that helps us strengthen our standards as market issues, understanding and best practices evolve,” said Dr. Jeffrey Hales, chair of the SASB Standards Board, in a statement. “Following rigorous market consultation and feedback, today we issue the first standards updates since the codified standards were published for use in 2018. This is an important milestone, as it takes the importance of standards maintenance and stewardship from an abstract idea to a set of concrete examples and demonstrates the value of being able to make targeted improvements to the standards in response to significant industry-specific events.”

Andrew Harding, chief executive of management accounting at the Association of International Certified Professional Accountants, representing AICPA & CIMA, praised the issuance of the new principles and standards. ‘’We welcome the publication of the Integrated Thinking Principles Prototype by the Value Reporting Foundation,” he said in a statement Tuesday. “We are particularly pleased to see that the business model framework concept is at the heart of the Principles, especially considering the growing focus on ESG and sustainability in corporate decision-making and reporting. Now more than ever, it is essential that accounting and finance professionals work in an integrated manner, and support their organizations in rethinking how they create value for all stakeholders. The Integrated Thinking Principles will help organizations reach this goal and will be a good complement [to] our soon-to-be-published updated Global Management Accounting Principles, enabling corporate reporting to stay fit for purpose.”  

Separately, on Tuesday, the International Federation of Accountants published its own vision for high-quality assurance of sustainability information, pointing to best practices identified during its year-long, global engagement campaign related to the State of Play in Sustainability Assurance. It discusses the importance of global standards, regulation that supports decision-useful disclosure, and the value of an interconnected approach to sustainability and financial information reporting and assurance.

“In order to be trusted, sustainability disclosure must be subject to high-quality, independent, external assurance,” said IFAC CEO Kevin Dancey in a statement. “Sustainability information must take its rightful place in the corporate reporting ecosystem and stakeholder confidence must be on par with financial reporting. Given the announcement of the International Sustainability Standards Board, the publication of a Climate Prototype, and IOSCO’s continued support for the initiative, it’s an appropriate time for regulators and authorities to put sustainability assurance on the agenda, as already proposed in the EU’s Corporate Sustainability Reporting Directive. We urge IFAC member organizations to promote high-quality reporting and assurance through discussions with policymakers, regulators, investors and other stakeholders.”