IOSCO sees role for itself in sustainable finance

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Apr 14, 2020

On April 14, 2020, the Board of the International Organization of Securities Commissions (IOSCO) has published a report 'Sustainable Finance and the Role of Securities Regulators and IOSCO'. The report was prepared by the IOSCO's Sustainable Finance Network (SFN) and notes as one aspect multiple and diverse sustainability frameworks and standards, including sustainability-related disclosure.

To inform its work, the SFN drew on a survey of the initiatives planned or undertaken by securities regulators and market participants to address the opportunities and challenges posed by sustainable finance. The report reflects the expectations from regulators and market participants that IOSCO should take an active role in facilitating global coordination and addressing transparency. The report notes:

[T]he SFN work to date points to a need to improve the comparability of sustainability-related disclosures. The lack of consistency and comparability across third party frameworks could create an obstacle to cross border financial activities and raise investor protection concerns.

The SFN has identified several actions that could contribute to enhanced comparability of sustainability related disclosure:

  • Alignment of frameworks and requirements
  • Identification of relevant components of disclosure
  • Increased public accountability and assurance standards
  • Increased engagement with asset managers on the integration of ESG factors in investment decision processes

Building on these, the report sets out the role that IOSCO can play and a proposal for next steps:

In response to these demands, IOSCO is looking to play an important role in addressing the challenges identified by the SFN while avoiding duplicating work done or being carried out by other standard-setting bodies or similar organizations. In particular, facilitating the provision of disclosure, both qualitative and quantitative, that is decision useful for both investors and companies is an area where IOSCO should be able to contribute meaningfully.

Therefore, IOSCO has decided to establish a Sustainability Task Force (STF). With a view to improve sustainability–related disclosures made by issuers and asset managers, the STF will identify and develop categories of disclosure which are material for investors and which are capable of falling within the supervisory and regulatory competence of securities regulators. The STF will then examine the categories of disclosure to assess whether industry specific or more broad metrics would provide decision useful information and comparability between different issuers. For this work, the STF will engage with the industry, voluntary third-party disclosure standard-setters and other relevant organisations.

Please click for the press release and the final report on the IOSCO website.

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