ASCG decides to create a new national funding mechanism for international and European standard setting initiatives

Due to the rapid developments at both international and European level to create new standard-setters in the field of sustainability reporting, it is becoming increasingly clear that significant financial resources will be required to set up these organisations in the coming months.

At the international level, a new International Sustainability Standards Board (ISSB) is expected to be set up at the IFRS Foundation next to the IASB in November this year. At the European level, the remit of the European Financial Reporting Advisory Group (EFRAG) is to be expanded to set European standards for sustainability reporting in accordance with the proposal of the Corporate Sustainability Reporting Directive (CSRD).

The ASCG takes up these challenges in a proactive manner and, at its meeting today, the Administrative Board has decided to create a new national funding mechanism for international and European standard-setting initiatives. It follows similar initiatives in other EU member states such as Denmark.

The Administrative Board has agreed on the following key points:

1. Until the end of 2021 the ASCG will set up a new national funding mechanism for the financing of international and European standard-setters. This includes the standard setting initiatives of the IFRS Foundation, i.e. the new ISSB as well as the IASB. At the European level, the focus is on the financing of EFRAG, which in future will also act as a European standard-setter in the field of sustainability.
2. The main features of the national funding mechanism should be based on the existing mechanism for the German financial contribution to the activities of the IASB. The financial contributions should reflect the strength of the German economy; however, the contributions are clearly of a voluntary
3. The national funding mechanism is intended to promote the development of internationally consistent standards. The standards should correspond to German economic and societal interests, should be developed in an due process and be practicable for reporting entities in Germany. It will not be used to finance initiatives that go counter these goals.
4. The opportunity to contribute must not be limited to parts of German society. In particular, the new mechanism should allow other companies and stakeholder groups to make a voluntary contribution beyond the membership of the ASCG. This also applies to the activities of EFRAG.
5. The collection of voluntary contributions should take place in separate buckets so that the contributing stakeholders can also support individual standard-setters in a targeted manner. With regard to EFRAG, depending on the type of amendment to its statutes, this should also be possible in the form of voluntary contributions, separated by activities in the area of ​​sustainability and financial reporting.
6. As with the current German financial contributions to IASB activities, there will generally be no financial guarantees for individual standard-setters due to the voluntary nature of the contributions. With a view to the EFRAG activities for the adoption of IFRS as part of EU law, these could be voluntarily financially supported by the ASCG in individual cases.

The chairman of the ASCG’s administrative board, Nicolas Peter, comments on today’s decision as follows: “The new national funding mechanism is an important visible signal of support for the rapidly developing sustainability reporting. Germany cannot stay behind, and our financial contributions shall reflect the strength of the German economy. The development of consistent international standard-setting is extremely important for the German economy as a whole. We want to secure the basis for their financing.”

The ASCG President Georg Lanfermann points out:” The creation of the national funding mechanism is another important step with a view to expanding the ASCG activities, where we will set up a special technical committee for sustainability reporting by the end of this year. We want to open up even more to broader society and to create a national platform for the exchange on issues regarding wider corporate reporting. ”

ASCG Vice President Sven Morich adds: “The funding model has already been successfully tested in the past when financing the IASB’s activities in the area of ​​financial reporting. In view of the upcoming important expansion of tasks, the financial contributions for EFRAG in particular should not be exclusively reserved for ASCG members, but should also be open to other stakeholder groups.”