International Accounting Standards Board chairman Hans Hoogervorst said his board plans to sign a memorandum of understanding with the International Integrated Reporting Council in what could be a step towards developing standards that encompass financial reporting and reporting on nonfinancial areas such as the environment, corporate governance and social responsibility.

During a conference Thursday at the offices of the New York Society of Security Analysts, Hoogervorst noted that the IASB is about to sign an MoU with the IIRC. “We have already been working with them quite intensively in the past couple of years,” he said. “We know that many investors think this is an important vein of reporting, so we want to help them and we want to be there when things are happening. The MoU will not govern our relationships in detail. It’s more or less a symbolic way of telling each other that we think we are both doing important work and we want to observe as much as possible.”

Financial Accounting Standards Board chair Leslie Seidman said she has been involved as an observer in the IIRC, but she appeared to be reluctant to commit FASB to a formal pact with the IIRC.

“Our role is to listen and learn about what investors would find useful information,” she said. “The issue that we have is that the primary objective of integrated reporting is to bring other dimensions of a business into the financial reports that aren’t necessarily of a financial nature. They would be related to things like governance, environmental issues, social issues, etc., and that’s certainly not my area of expertise. Our role is to bring our experience as a standard-setter to the discussions to help the IIRC determine what steps they might go through to gather input, to gain consensus, etc. But we at this point at least think it’s beyond our purview to move to a standard-setting role here, to potentially require inclusion of that kind of disclosure in the financial reports. We’re very interested, supportive, and trying to bring a different kind of competence to the discussion.”

Jenifer Minke-Girard, senior associate chief accountant in the Securities and Exchange Commission’s Office of the Chief Accountant, noted that some lawmakers in Congress have asked the SEC to examine that kind of information. “From our perspective, Congress does occasionally ask the SEC to deal with certain issues which may be more social or political in nature,” she said. “Maybe they want information from companies, and they don’t necessarily have a good mechanism for how to get that, and it ends up being an exhibit to an SEC filing. There have been some that have gotten a lot of attention, in terms of conflict minerals that may be in a company’s products or processes, and then extractive industries with their payments to governments and so forth. Some of that ends up with us. In some ways, it’s a challenge. I don’t personally get involved in a lot of them, but for many of the accountants, it’s a different thing to think about. It’s not necessarily financial reporting. It’s an information strain that is desired by constituencies that have gone to Congress and asked for information.”

Former FASB chairman Robert Herz noted that there was at least one similar initiative underway. “I would say in that regard, there’s a U.S. organization that was created last year called the Sustainability Accounting Standards Board, or SASB, so you can see they adapted it from IASB, FASB and GASB,” he said. “That group is developing industry-specific metrics relating to environmental, social and governance data by bringing industry working groups together. I think initially the idea would be that those would be adopted by those industries, and somewhere down the line they might be in a 10K type of document.”