Bringing ESG METRICS AND REPORTING into Alignment: A partnership between the SASB and the IIRC may help boards establish ESG reporting standards.

• Author: Hall, April
• Position: ESG REPORTING

As institutional investors, employees and other stakeholders focus on ESG, board members and management want consistent standards for measuring corporate efforts and advancement.

The Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) have worked separately on ESG reporting standards, developing the "Integrated Thinking Principles," "Integrated Reporting Framework" and "SASB Standards." Those programs will now be merged into the Value Reporting Foundation (VRF).

Says VRF CEO Janine Guillot:"By more closely aligning the Integrated Reporting Framework and the SASB Standards, 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 is the former CEO of SASB and current CEO of VRF, and is joined by co-chairs Richard Sexton, former vice chair of PwC, Global Assurance, and Robert K. Steel, chair of Perella Weinberg Partners.

"I think the merger elevates not only ESG information, but how we talk about comprehensive corporate reporting," says Jonathan Labrey, chief policy officer at VRF and head of its U.K. office. "It links financial information to ESG information and includes the intangibles--what we would call in the IIRC framework the intellectual capital.

There are two parts to the merger. One is the comprehensive nature of the information that the Value Reporting Foundation is overseeing through the standards and framework that we have. The other is that this is becoming much more an issue for the board and for the management of the business. I think this is not just about corporate disclosure and reporting, but it's actually about better corporate governance as well.

"Making ESG reporting structures and standards clear and usable is key," Labrey says. "This merger was a response to market pressure for greater simplification. We have a responsibility to demonstrate how these ESG reporting systems work together as one system and to end the perception of competition between the standard-setting organizations and the framework providers. We can move to demonstrate how all the different standards and frameworks actually are interoperable and ultimately part of one global corporate reporting system."

That doesn't mean that these standards or frameworks will be universal. Many board members want ESG reporting to reflect different...