A global securities watchdog on Tuesday formally backed new international company climate disclosures to help speed up international adoption and crack down on greenwashing.
Regulators are keen to replace a patchwork of voluntary private-sector norms with more rigorous rules overseen by regulators to stop companies from inflating their climate-friendly credentials.
Requested by the G20 economies, the International Sustainability Standards Board (ISSB) last month approved its first standards for companies to tell investors how climate change affects their operations from 2024.
“Investors are demanding better information about sustainability risks and opportunities,” Jean-Paul Servais, chair of the International Organization of Securities Commissions (IOSCO), said in a statement.
The watchdog comprises regulators from the United States, Japan, China, Germany, with member Britain already indicating it will make ISSB rules mandatory for listed companies.
“IOSCO now calls on its 130 member jurisdictions, regulating more than 95 per cent of the world’s financial markets, to consider ways in which they might adopt, apply or otherwise be informed by the ISSB Standards … in a way that promotes consistent and comparable climate-related and other sustainability-related disclosures for investors,” IOSCO said.
The ISSB is part of the IFRS Foundation, responsible for writing financial accounting rules which IOSCO endorsed two decades ago, lending them a credibility boost that led to mandatory adoption in over 140 jurisdictions.
The European Union and United States, however, are writing their own corporate sustainability disclosure rules, though aligned in part with the ISSB’s “baseline” norms to minimize duplication for companies that operate in many countries.