Finance ministers representing the Group of 20 Nations together with central bankers have reaffirmed support for the International Sustainability Standards Board’s work to finalise and issue its first sustainability disclosure standards.
In a communiqué following last week’s G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Bengaluru, the group said: “We look forward to the early finalisation of standards by the International Sustainability Standards Board (ISSB) for climate-related financial disclosures, and its work beyond climate.”
In response, IFRS Foundation chair Erkki Liikanen welcomed the update from the G20 grouping.
He said: “We are grateful for the G20’s statement and encouragement for our work.
“We will continue our close cooperation with the Financial Stability Board (FSB), International Organization of Securities Commissions (IOSCO) and others to support the widespread adoption of ISSB Standards once they are issued later this year.”
The G20 FMCBG also noted that the FSB will work with ISSB and securities regulators to prepare a report on the progress of jurisdictions and firms on climate-related financial disclosures by October 2023.
The report falls under the financial sector issues strand of the G20’s Finance Track workstream.
At its meeting last month, the ISSB voted in favour of a 1 January 2024 effective date for its first two sustainability standards.
Of those two standards, IFRS S1 sets out the global baseline in sustainability reporting while IFRS S2 addresses climate change.
A global baseline in sustainability reporting is important because it provides a common framework and language for companies to report on their sustainability performance.
It also allows investors, regulators, and other stakeholders to compare the sustainability information across different companies.
Currently, there is a lack of consistency in sustainability reporting practices, as well as concerns about ’greenwashing’.
The update goes on to underline the G20’s commitment to sustainable finance as a route to “achieving sustainable, resilient, inclusive and equitable economic growth”.
The IOSCO in a 17 February statement welcomed the ISSB’s “determined progress” to complete the two standards.
“It is particularly important that the ISSB has confirmed that its standards will be ready for use as early as January 2024,” IOSCO said.
Meanwhile, in a 16 February letter to the G20, the FSB noted that climate change “remains a key priority for financial regulators and supervisors, given its considerable implications for global financial stability”.
The FSB also emphasised that it is continuing “to coordinate work to address climate-related financial risks through its climate roadmap”.
A key milestone in this effort, the FSB added, “is the finalisation of the [ISSB’s] global standards for climate disclosures, in the first half of this year”.
The letter continued: “The development of climate-related corporate disclosures will provide a unique opportunity to avoid harmful fragmentation and create a global baseline standard.”