GRI and ISSB Trustees to Launch Sustainability Innovation Lab
The Global Reporting Initiative (GRI) and the IFRS Foundation will launch the Sustainability Innovation Lab (SIL) later this month, a collaborative effort aimed at streamlining the reporting process for companies, the organizations announced on November 9. The goal of the SIL is to advance capabilities for reporting using the GRI Standards and the International Sustainability Standards Board’s (ISSB) IFRS Sustainability Disclosure Standards. “The IFRS Foundation continues to work closely with GRI on two tracks, firstly, to make it straightforward for companies using both the IFRS Sustainability Disclosure Standards and the GRI Standards, and secondly to support innovation and knowledge building in the disclosure landscape,” ISSB Chair Emmanuel Faber said in a statement. “The SIL provides a very welcome avenue for us to advance our cooperation.” The SIL will initially be operated by the GRI ASEAN Network and managed by a steering committee that is led by senior representatives from GRI and the IFRS Foundation—with representatives of key partners providing strategic direction, according to the announcement. Multi-stakeholder working groups are being established to focus on four priority areas: digital taxonomies, audit and assurance, smaller companies, and public sector reporting.
ISSB’s New Technical Agenda to be Completed Next Year
The International Sustainability Standards Board (ISSB) will complete its new technical agenda “during the first half of next year,” chair Emmanuel Faber said on November 20. The board heard that it needs “to more clearly articulate and define a longer-term strategic vision of the future of the ISSB standards,” Faber told a board podcast. “And I think we welcome that feedback and it’s probably an invitation for us to use to look at the redeliberations around this RFI on the future agenda work with a very strategic vision of what it actually means both on what we do and also how we do it in order to ensure that we meet expectations on the reasons why we’ve been created,” he said. His remarks were an effort to explain the board’s main takeaways from the more than 400 comment letters that were submitted to a Request for Information (RFI), Consultation on Agenda Priorities, which was published in May for public comment. The proposal identified four possible topics that the board could address over the next two years: biodiversity, ecosystems and ecosystem services; human capital; human rights; and integration reporting. Comments had been due by September 1.
Power and Utilities Sector asks FASB to Fix Rules for Construction Costs tied to Leases
The power and utilities sector has asked FASB to address a narrow reporting issue involving the costs around the construction of items like wind turbines or the installation of gas pipelines on land leased from others. An accounting anomaly arises under ASC Topic 842, Leases, with respect to land or building lease costs incurred during the construction period of a fixed asset affixed to the land, according to a letter from Edison Electric Institute (EEI) and American Gas Association—organizations that represent electricity and natural gas distribution companies in the US. At the crux of the matter: today’s rules don’t consistently enable firms to properly reflect the underlying economics of such transactions, EEI’s Senior Director of Accounting Randall Hartman said on November 17. The groups asked FASB to align the accounting for all land rental costs incurred during construction of wind turbines and other assets so that they can be capitalized as part of the construction costs—stressing that this is an emerging issue in the sector. “So you’ve got economically identical transactions, such as building a power plant to provide electricity from renewable resources, but in some cases the cost of the plant might include land use costs during construction, in other cases it might not,” Hartman explained. “In our view, this is a potential inconsistency that didn’t make sense from an economic perspective,” he said. “The result of that would be that similar facilities that would have the same economics might have ultimately different cost profiles and the operators might have different financial results even though the overall economics are the same.”