Speech of the Chair of the Board of IOSCO at the IFRS Foundation Conference

  • IOSCO (International Organization of Securities Commissions) (dark gray) Image

28 Jun, 2022

On 23 June 2022, Mr Ashley Alder, Chief Executive Officer of the Securities and Futures Commission (SFC) of Hong Kong and Chair of the Board of the International Organization of Securities Commissions (IOSCO) outlined in a speech at the IFRS Foundation Conference the path forward for the endorsement of future standards of the International Sustainability Standards Board (ISSB) by IOSCO. A comprehensive summary of the speech is now available on the SFC website.

In his speech, Mr Alder noted that by endorsing the standards, IOSCO would send a strong signal to its large membership of market regulators that they should examine how they might adopt the standards in their own jurisdictions.

While the critical step in evaluating the ISSB standards and finally endorsing them would be to consider the degree to which and how they can be adopted in practice, there were also more detailed points to be considered by IOSCO as well:

  • the ISSB standards should be compatible and connected with existing accounting and financial reporting standards — serving as a “bridge”;
  • they should act as a common base for jurisdiction-level requirements, making them interoperable with one another using a building blocks approach;
  • they should provide the degree of consistency necessary to enable markets to reliably price sustainability-related risks and opportunities and support capital allocation; and
  • they should form the basis for the development of a credible assurance framework.

Mr Alder stressed that he firmly believed the ISSB was the most credible mechanism for achieving the above and creating a baseline for climate disclosure standards.

Mr Alder also commented on the relationship between sustainability disclosures and traditional financial statements and noted this had become increasingly important. He suggested that the ISSB should work closely with the International Accounting Standards Board (IASB) to consider how preparers could be encouraged to develop the factors relevant to calculating enterprise value from a quantitative perspective, and to consider how that calculation might connect to traditional financial statements. The overall aspiration was to bridge the divide between conventional financial disclosures and ISSB sustainability disclosures centred on the concept of enterprise value, so that in combination they paint the full picture.

Please click for the full summary on the SFC website.

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