In Focus

Major Players Signal Streamlined ESG Disclosure

The International Federation of Accountants (IFAC) recommended the creation of a new global Sustainability Standards Board to be run by the International Financial Reporting Standards (IFRS) Foundation alongside the International Accounting Standards Board (IASB). The proposed International Sustainability Standards Board (ISSB) would “develop global standards and rationalize the current fragmented ecosystem”, following a “building blocks” approach that would build upon existing non-financial reporting frameworks, including the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI).
 
This recommendation came the same day as a statement by five leading sustainability standards organizations, SASB, GRI, the Carbon Disclosure Project (CDP), the Climate Disclosure Standards Board (CDSB) and the International Integrated Reporting Council (IIRC), saying that they intend to work together toward a more comprehensive system of non-financial disclosure reporting. Their organizations which focus on different definitions of materiality, the statement says, serve as a “natural starting point” for a “comprehensive, globally accepted, corporate reporting system.”

CII Files Petition Seeking Full SEC Review of Decision to Let Companies Raise Capital Via Direct Listings

CII sent the SEC a petition September 8 requesting that the agency review and reverse an August 26 staff decision approving the New York Stock Exchange’s plan to allow companies to raise capital by conducting “primary direct floor listings,” which may not carry standard legal protections against securities fraud. The petition asks all five SEC commissioners to review the NYSE proposal, which some experts view as “a game changer” because it allows companies to raise primary capital from a direct listing without the traditional underwriting process. CII is concerned that companies may attempt to limit their liability to investors for damages caused by false statements of fact or material omissions of fact within registration statements associated with direct listings. That issue was highlighted by the litigation over the direct listing of Slack, in which the company argued that investors could not challenge a misleading registration statement if they cannot trace their shares to those offered in the registration statement. CII has urged the SEC to address this issue by establishing a system of traceable shares as part of the commission’s long-overdue proxy plumbing project before approving an expansion of the direct listing regime. For background, see this Wall Street Journal story.