The Trustees of the IFRS Foundation have today published the annual report and audited financial statements for the year ended 31 December 2024.
The report highlights the Foundation’s vital role in bringing transparency, accountability and efficiency to capital markets around the world. It also underscores the importance of stakeholder engagement and collaboration in developing reporting standards that result in decision-useful information for investors, are cost-effective for companies and are enforceable by regulators worldwide.
2024 achievements
The report describes the substantial progress made by both boards in their respective missions.
The International Accounting Standards Board (IASB) ensured that IFRS Accounting Standards continued to meet the evolving information needs of investors by issuing two new Standards—IFRS 18 Presentation and Disclosure in Financial Statements, which represents a major overhaul of how companies present their financial performance, and IFRS 19 Subsidiaries without Public Accountability: Disclosures, which simplifies the reporting for subsidiary companies. The IASB also consulted on 13 projects and finalised or began post-implementation reviews of three major Standards.
The International Sustainability Standards Board (ISSB) prioritised work to support the significant number of jurisdictions adopting or otherwise using its inaugural Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (more than 35 jurisdictions, together representing more than 40% of global market capitalisation). The ISSB also provided a wide range of materials to help companies and investors prepare for use of its Standards, and began work to enhance SASB sector-specific standards and research investor information needs related to sustainability-related risks and opportunities arising from biodiversity, ecosystems and ecosystem services and human capital.
Organisational review
The report also references work undertaken by the Trustees to ensure the IFRS Foundation is fit for the future, following several years of rapid expansion.
When the ISSB was established in 2021, stakeholders strongly encouraged the Foundation to move quickly in consolidating the fragmented disclosure landscape into a single, global baseline of sustainability disclosures for the capital markets. To achieve this, the Trustees approved a period of up-front investment to allow for the consolidation of leading investor-focused sustainability disclosure organisations into the ISSB—thus providing the ability to deliver at pace and scale, and in doing so meet market demand.
As the ISSB has now achieved critical mass, the Trustees initiated an organisational review to ensure the Foundation is well placed for the next stage in its development.
The review includes three elements:
- Reorganisation: A new operating model that streamlines the resources of the Foundation and its inherited organisations to enhance unified decision-making and clearer accountability. This work is now complete.
- Cost savings and efficiencies: The reorganisation enables efficiencies and a more cost-effective model of service delivery. This will involve reducing staff costs through both natural attrition as well as redundancies (representing approximately 15% of staff costs), resource and process optimisation and other cost saving measures, including in the operating costs of the boards and the costs of governance.
- Shaping the future funding model: The ISSB’s early development relied mostly on legacy organisations’ funding and seed funding by public/private partnerships hosting ISSB’s main offices and teams. This funding is now increasingly complemented by emerging philanthropic and corporate funding support. The ISSB funding will gradually be diversified towards a market participants-led funding model akin to the IASB’s. For this, the Foundation has created a new funding team under senior leadership, to implement a multi-year strategy to further enhance funding arrangements in support of both boards.
As a result of these changes, the Foundation will be well placed for the next stage in its evolution. This includes delivering on its public interest mission in the most efficient and effective manner, with full respect to due process, protecting its independence and ensuring high levels of stakeholder participation around the world through a presence in key locations—all hallmarks of the Foundation’s success to date.
Financial performance
For financial year 2024, the Foundation generated £67.6m of income (2023: £68.4m) with operating expenses of £68.9m (2023: £67.5m), incurring a pre-tax deficit of £1.6m (2023: surplus £1.2m) which is amply covered by reserves totalling £47.9m (2023: £49.5m).
The deficit was mainly due to one-off expenditures on technology programmes to upgrade and integrate the systems of the Foundation and the consolidated organisations, as well as a shortfall in income against target as the organisation refreshed its funding programmes and began diversifying beyond the ISSB’s initial seed funding arrangements.
The organisational review aims to close the deficit gap that is anticipated to build over the next two years due to staff costs that reflect the cost structure prior to the reorganisation, and a potential reduction in income as certain seed funding arrangements conclude in 2026. The steps outlined in the review are designed to proactively manage these risks and work towards achieving a balanced budget by the end of 2026, ensuring the Foundation's long-term financial stability.
Introducing the annual report, Erkki Liikanen, Chair of the IFRS Foundation Trustees, said:
This annual report describes another year of substantial achievements by both standard-setting boards, whilst the organisational review will help consolidate gains and ensure the Foundation is well positioned for the next stage in its evolution.
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