The International Organisation of Securities Commissions (IOSCO) has endorsed the sustainability-related financial disclosures standards recently issued by the International Sustainability Standards Board (ISSB).
The standards, IFRS S1 and IFRS S2, were announced in June and set out a global baseline of requirements for companies to disclose information about their sustainability-related risks and opportunities.
IFRS S1 and IFRS S2 are designed to help investors price sustainability risks and opportunities, and to make informed investment decisions, the IOSCO’s endorsement is seen as a major step towards delivering on that goal.
IOSCO has called on its 130 member jurisdictions, regulating more than 95% of the world’s financial markets, to consider ways in which they might adopt, apply, or otherwise be informed by the ISSB Standards within the context of their jurisdictional arrangements.
“This is a critical moment in advancing IOSCO’s goal of improving climate-risk disclosure for investors,” said Jean-Paul Servais, chair of the board of IOSCO. “Investors are demanding better information about sustainability risks and opportunities, and the G20, the G7, and the FSB rely on IOSCO to assess whether the ISSB Standards are fit for purpose for capital markets.”
Unlike upcoming standards set by EFRAG as part of its Corporate Sustainability Reporting Directive (CSRD), the ISSB standards are entirely voluntary, and companies can choose to use them at their discretion.
The UK Government recently signalled support for the ISSB and announced that it would be establishing a mechanism for formal UK endorsement and adoption of the standards. The aim is to minimise fragmentation of reporting requirements, reduce reporting burdens, and enable the availability of consistent sustainability information for users.
Rodrigo Buenaventura, chair of IOSCO’s Sustainable Finance Task Force, added: “The publication of this endorsement is the result of truly global efforts. On the one hand the ISSB and the IFRS Foundation have ensured that the final standards are the result of broad stakeholder input.
“On the other hand, this endorsement by IOSCO is an important milestone that we expect will result in global capital markets being able to access reliable, consistent, and comparable sustainability related information which will allow investors to price sustainability risks and opportunities and help them make investment decisions.”
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