The Dutch Authority for the Financial Markets (AFM) supports the creation of a standard setter for non-financial reporting by the International Financial Reporting Standards (IFRS) Foundation. This is an important step in the formulation of international standards for non-financial reporting. The AFM’s standpoint is laid down in its response to the consultation of the IFRS Foundation on the creation of a Sustainability Standards Board (SSB).
- International standards are needed for relevance and comparability
- A broader scope than solely climate-related is preferred
- Impact of ESG factors on both business and society
- Standards have to be verifiable and enforceable
International standards are needed for relevance and comparability
Non-financial information is becoming increasingly important. This calls for international reporting standards. The creation of an SSB can play a significant part in this. The AFM sees this as a necessary step in order to improve the relevance, reliability, comparability and consistency of reported non-financial information.
A broader scope than solely climate-related is preferred
Moreover, the AFM argues that the interpretation of the term ‘non-financial information’ needs to be expanded to include tangible and intangible assets like technologies, trade names and human capital as well as environmental, social and governance (ESG) factors. The AFM recognises the urgency of addressing climate-related issues, but calls for a simultaneous approach to these other factors.
Impact of ESG factors on both business and society
For better transparency and investor protection, reporting on sustainability should present a balanced picture, or two sides of the same coin. On the one hand, this means considering the impact of the ESG factors on the added value of a business. On the other, it means disclosing the effects of business operations on these ESG factors.
Standards have to be verifiable and enforceable
In the development of international standards for non-financial reporting, attention needs to be paid to the possibilities for actual verification and certification as well. This means that clear and specific reporting standards are needed that lead to relevant and reliable information that is verifiable and enforceable.
Journalists may contact Daniëlle de Jong, AFM spokesperson, on +31 (0)20 797 2129 or at firstname.lastname@example.org.
The AFM is committed to promoting fair and transparent financial markets.
As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.