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Erkki Liikanen, Chair of the IFRS Foundation Trustees, delivered his speech at the IFRS Foundation Trustees' stakeholder dinner in Singapore on 4 June 2024.

It’s an honour to be here with you all.

I thank the Accounting and Corporate Regulatory Authority (ACRA) for co-hosting and organising this event, and the Institute of Singapore Chartered Accountants (ISCA) for supporting this event. It’s a great opportunity to exchange views with people here in Singapore and the wider region.

The history of the IFRS Foundation Trustees goes back to the year 2000. Paul Volcker—the former Chair of the Federal Reserve in the US—was the first Chair of Trustees. He was invited to the US Congress to discuss International Financial Reporting Standards, or IFRS. That was on 7 June 2001, so on Friday it will be 23 years ago.

Paul said that as a central banker and treasury official he had long been aware of the importance of accounting standards in providing an accurate and consistent picture of a company’s performance. He emphasised that he had been sympathetic to the goal of harmonised standards for many years.

He told Congress that Trustees do not intervene in technical standard-setting—their role is to safeguard the integrity of the process. The role of standard-setting belongs to the board of experts, who have diverse professional backgrounds.

Paul also informed Congress that the Trustees had secured financial support to move forward with the work from big audit firms and corporations on all six continents. He was pleased the Trustees had gained support from central banks, regulatory authorities and international institutions.

We still need this support today and will continue to do so in the coming years.

Singapore has been involved since the beginning. Today, Singapore incorporated companies listed on the Singapore Stock Exchange would be required to report their financial statements using accounting standards equivalent to IFRS Accounting Standards.

In 2019 we entered a new phase—the Trustees began work on a strategy review. Climate change was seen as ‘the ultimate challenge for economics’.[1] The solution required political action, transition plans from companies and climate-related disclosure standards.

It became apparent that the solution must come from both public policies and the capital markets.

Many stakeholders recognised the importance of sustainability reporting. The existing, fragmented landscape of voluntary sustainability reporting standards and frameworks was not enough to meet evolving needs.

Capital markets needed standards for sustainability disclosures. Several international organisations encouraged the IFRS Foundation to act.

In 2020 we decided to hold an open, global consultation asking two key questions. First, was there demand for global sustainability standards? Second, should the IFRS Foundation play a role, and if so, how?

The response—urgent demand and widespread support.

Before taking the next step, we set out several success criteria—sufficient global support, work with jurisdictions, funding and synergies with traditional financial reporting. We were able to make the announcement at COP26 in Glasgow. We established the International Sustainability Standards Board, or the ISSB. We also committed to consolidate the standard-setting organisations and published the first two prototypes for standards. IOSCO and others identified also the demand and supported further actions. The IFRS Foundation with its two boards provided the solution.

The ISSB has moved at pace. Its inaugural Standards were published in June 2023.

A month later, IOSCO endorsed the Standards.[2] It called on its 130 member jurisdictions to take action. IOSCO’s members regulate more than 95% of the world’s capital markets.

Many jurisdictions around the world, including Singapore, are now moving swiftly to develop their own strategies based on the ISSB’s Standards.

The creation of the ISSB underscores the Foundation’s commitment to meeting investors’ information needs through our ‘One Foundation, two boards’ structure.

Our Standards enable companies to communicate effectively with their investors.

Singapore is once again playing an important part in establishing our Standards. Given Singapore’s leading role in the region and our history of successful collaboration, it seems fitting that Singapore recently announced that ACRA and Singapore Exchange Regulation will introduce mandatory climate-related disclosures for all listed issuers and large non-listed compnaies in a phased approach, using requirements aligned with the ISSB Standards. [3]

I thank everyone here for your dedication to working with us, for positive engagement and open dialogue.

The IFRS Foundation remains committed to serving the public interest—and will continue to do so—supported by engagement and dialogue.

Together we can ensure that the financial regulatory system continues to meet changing global needs.

Thank you.

[1] William D Nordhaus, ‘Prize lecture—Climate change: The ultimate challenge for economics’, The Nobel Prize, 2018, https://tinyurl.com/49v5exdp.

[2] IOSCO, ‘Media release—IOSCO endorses the ISSB’s Sustainability-related Financial Disclosures Standards’, IOSCO, 2023, https://www.iosco.org/news/pdf/IOSCONEWS703.pdf.

[3] Ministry of Finance Singapore, ‘Speeches—FY2024 MOF Committee of Supply Debate Speech by Second Minister for Finance Mr Chee Hong Tat’, February 2024, https://www.mof.gov.sg/news-publications/speeches/fy2024-mof-committee-of-supply-debate-speech-by-second-minister-for-finance-mr-chee-hong-tat; ACRA, ‘News—Climate reporting to help companies ride the green transition’, February 2024, https://www.sgxgroup.com/media-centre/20240228-climate-reporting-help-companies-ride-green-transition.