The International Organisation of Securities Commissions (IOSCO) has formally endorsed the new International Financial Reporting Standards (IFRS) on sustainability and climate-related disclosure.
In what IOSCO describes as a “major step”, it is urging its 130 member jurisdictions, which together oversee over 95% of the global financial markets, to consider incorporating these standards into their regulatory structures. This move follows the International Sustainability Standards Board’s (ISSB) release of new global standards for sustainability and climate reporting, IFRS S1 and IFRS S2, last month.
As part of its early support for the ISSB project, IOSCO, the top international policy forum and standards creator for securities regulators, created a Technical Expert Group (TEG) in early 2021 to work closely with the ISSB. This group’s responsibilities included assessing whether the ISSB’s recommendations could form a robust basis for creating an international reporting standard.
According to IOSCO’s endorsement statement, the standards are deemed fit to serve as a global framework for the capital markets to develop the use of sustainability-related financial data.
In conjunction with IOSCO’s endorsement, the IFRS Foundation published an outline of its Adoption Guide for regulators, set to be released later this year. This guide aims to assist regulatory implementation of the new standards.
IOSCO Chair of the Board Jean-Paul Servais said, “At the beginning of my mandate as Chairman, I said IOSCO would meet expectations because the delivery of high-quality standards in due time is of the essence when it comes to sustainability. Today, with the publication of the endorsement decision, I am honoured to say we did just that.”
Rodrigo Buenaventura, Chair of IOSCO’s Sustainable Finance Task Force, called the endorsement “an important milestone” and added, “this 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.”
Emmanuel Faber, Chair of ISSB, highlighted that, “Widespread regulatory adoption of a global baseline of sustainability-related disclosures through the ISSB Standards will secure the consistency and comparability of information that capital markets demand. IOSCO’s timely endorsement and strong encouragement for capital market authorities to act confirms that the ISSB Standards are fit for purpose.”
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