The International Organization of Securities Commissions (IOSCO) said it sees an ‘urgent need’ for global ESG reporting to improve.
While the past few years has seen an unprecedented increase in ESG assets, including a 50% increase last year alone, robust sustainability information is ‘currently not being met,’ IOSCO said in a press release on 24 February, with too many companies choosing to ‘report sustainability-related information selectively, referencing different frameworks.’
In response, the IOSCO board, which includes regulators from some 34 countries globally, identified three main areas for improving disclosures by companies and asset managers. These include:
1. Encouraging globally consistent reporting: This should comprise a common set of international standards for sustainability-related disclosure across jurisdictions, covering all sustainability topics and leveraging existing principles, frameworks and guidance.
2. Promoting comparable metrics and narratives: This will promote greater emphasis on industry-specific, quantitative metrics in companies’ instability-related disclosures and standardisation of narrative information.
3. Co-ordinating approaches: This includes i) promoting closer integration of reporting under current accounting standards and frameworks, and ii) facilitating independent assurance of companies’ disclosures
IOSCO said it plans to work with the IFRS Foundation, a non-profit accounting organisation, and others in order to advance these three priorities.
‘There is an urgent demand to improve sustainability reporting in a way that meets market needs,’ said Ashley Alder, chair of IOSCO and CEO of the Securities and Futures Commission (SFC) of Hong Kong.
The initial focus will be on climate change, but will eventually broaden to include other sustainability issues as well, IOSCO said.
‘Given the urgency of the climate challenge, IOSCO supports a ‘climate first’ approach in the near term,’ the body explained.