Speaking at COP26 today, Ashley Alder, Chairman of IOSCO (and CEO of the Hong Kong SFC), welcomed the publication by the IFRS Foundation of the prototype for the Climate Disclosure standard to be finalized in 2022 and told delegates that the IFRS Foundation is making good progress towards issuing the climate disclosure standard in 2022.
Ashley Alder said: “We have been looking for five key things from the IFRS Foundation:
Prompt establishment of the ISSB,
an early public indication for the market of the general approach the climate disclosure standard will take,
close and credible engagement with stakeholders,
interoperability with other sustainability reporting requirements in jurisdictions and
evidence of a strong understanding of what markets need in terms of meaningful disclosures.
Following close interaction with IOSCO on the now published prototype for the ISSB’s climate disclosure standard and the imminent announcement of the leadership of the ISSB, the IFRS Foundation is making good progress.”
He concluded: “If the ISSB’s future standard meets IOSCO’s expectations, our endorsement will support all our 130 members in considering ways they might adopt, apply or be informed
by the standard.”
The setting up of the ISSB and the issuance of the international climate disclosure standard are key pillars of IOSCO’s overall sustainable finance strategy.
IOSCO set out in 2020 that it was not happy with either the fragmented way private sector standard setting for sustainability was developing or with the scale of the risk of greenwashing.
By the end of 2021, IOSCO will have published its detailed analysis of the disclosure issues facing both issuers and asset managers and its assessment of sustainability data and ratings.
In 2022, it will focus on a careful assessment of the ISSB’s draft climate disclosure standard, in parallel with stakeholder consultations by the ISSB. IOSCO’s aim is to endorse the standard before the end of 2022 if it is satisfied that the standard sets a practical and effective global baseline for climate disclosures to financial markets across the globe.
Erik Thedéen, (head of the Swedish
Financial Supervisory Authority) is Chair of the task force set up by the
IOSCO Board, mandated to drive the process.
He commented: “Climate
change is global in nature, and this calls for global action. To have a global baseline
for corporate disclosure will be key to enable the necessary
transition. Now, important steps have been taken by the IFRS Foundation and the market can get an idea of where we are heading.
A global baseline for sustainability disclosures is a prerequisite to enable investors
to correctly evaluate the risk and opportunities in investments, regardless of where they are in the world. This will enable the financial
sector to better allocate capital
towards sustainable investments. We want to get the future risk and opportunities that comes with the transition to a carbon net zero world, into the pricing of investments today. We are particularly pleased that markets
can begin to see how a global baseline and jurisdiction specific requirements can be operated
compatibly.”
Jean Paul Servais Vice Chair of IOSCO (head of the Belgian securities Regulator the FMSA) is Chair of the global Monitoring Board administered by IOSCO to oversee the work of the IFRS Foundation (and now ISSB) and provide assurance that the public interest is forefront. Today the Monitoring Board published a statement welcoming the announcement of the formation of the ISSB and published additional information on its engagement with the IFRS Trustees’ proposals in this area. Mr. Servais commented: “To prosper, sustainable finance requires credible baseline global standards developed through an authoritative process that safeguards the global public interest. The ISSB standards are poised to become the basis for sustainability disclosures globally, The IOSCO-led Monitoring Board will ensure these standards are subject to the same robust governance, due process and oversight as IFRS accounting standards, while strengthening the interconnectivity between IFRS financial reporting and IFRS sustainability disclosures.”
