ESMA expresses strong support for the ISSB's work

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14 Jul, 2022

The European Securities and Markets Authority (ESMA) has commented on the two ISSB exposure drafts ‘General Requirements for Disclosure of Sustainability-related Financial Information’ and ‘Climate-related Disclosures’. The comment letter contains a long introduction discussing the relationship between European sustainability standards and ISSB standards.

The comment letter opens with an explanation of the European legislation in the area of sustainable finance mentioning among other developments the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). The comment letter notes: 

While ESMA fully supports and actively contributes to these EU efforts, we note the need to ensure the better flow of information across the sustainable investment chain including for SMEs, as recently highlighted by the G7, and to effectively support the shift towards a more sustainable economic and financial system not only within the EU, but also at global level. To this end, in ESMA’s view, it is necessary that regional standardisation, most notably in Europe, and international efforts go hand-in-hand. Both efforts should enable a target scenario where issuers can rely on high-quality reporting standards which are consistent, interoperable and as much as possible global and, where necessary, regional or jurisdiction-specific.

ESMA welcomes the IFRS Foundation’s initiative to consolidate some of the existing standard-setting and framework initiatives and expresses strong support for the work of the ISSB to reach a common set of internationally accepted high-quality sustainability reporting standards which could serve as a global baseline. ESMA believes that the ISSB can play an important role in aggregating the relevant players and help building an internationally agreed baseline of sustainability reporting standards. ESMA stresses that a global solution to sustainability reporting is crucial:

Lacking such a solution, we face the risk of a continued fragmentation of the sustainability reporting landscape with increasing costs and risks for the investment community as well as issuers operating internationally, and ultimately more difficulties to give effect to the much-needed sustainability transition.

Please click to access the full comment letter on the ESMA website.

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