The International Organization of Securities Commissions (IOSCO) this morning announced its endorsement of the International Sustainability Standards Board’s (ISSB) standards – International Financial Reporting Standards (IFRS) S1 and S2 – following a comprehensive review.
IOSCO has engaged extensively with the ISSB over the past two years, culminating in a comprehensive and independent review of the final ISSB standards, the organisation stated.
After a detailed analysis, IOSCO has determined that the ISSB standards are appropriate to serve as a global framework for capital markets to develop the use of sustainability-related financial information in both capital raising and trading and for helping globally integrated financial markets accurately assess relevant sustainability risks and opportunities.
IOSCO is now calling on its 130 member jurisdictions, which regulate more than 95% of the world’s financial markets, to consider ways in which they might adopt, apply or otherwise be informed by the ISSB standards within the context of their jurisdictional arrangements to promote consistent and comparable climate-related and other sustainability-related disclosures for investors.
Jean-Paul Servais, chair of the board of IOSCO, said: “This is a critical moment in advancing IOSCO’s goal of improving climate-risk disclosure for investors. Investors are demanding better information about sustainability risks and opportunities, and the G20, the G7, and the FSB [Financial Stability Board] rely on IOSCO to assess whether the ISSB standards are fit for purpose for capital markets.”
He said that IOSCO’s members analysed the ISSB’s standards against IOSCO’s endorsement criteria and found that, as the ISSB conducted a robust process, the standards serve as an “effective and proportionate global framework of investor-focused disclosures on sustainability and climate-related risks and opportunities”.
The ISSB was established in November 2021 to deliver a global baseline of sustainability-related disclosure for global capital markets.
IOSCO’s endorsement sends a strong signal to jurisdictions around the world that the ISSB standards are fit for purpose for capital market use, enabling pricing in sustainability-related risks and opportunities, and to facilitate enhanced data collection and analysis.
The endorsement is expected to resonate as well with growth and emerging markets which make up 75% of IOSCO membership.
To coincide with the endorsement, the IFRS Foundation has published a high-level roadmap providing transparency around the IFRS Foundation and the ISSB’s strategy to support jurisdictional adoption. The document is a precursor to an Adoption Guide for regulators, which will be finalised later in 2023.
Emmanuel Faber, ISSB chair said: “Widespread regulatory adoption of a global baseline of sustainability-related disclosures through the ISSB standards will secure the consistency and comparability of information that capital markets demand. IOSCO’s timely endorsement and strong encouragement for capital market authorities to act confirms that the ISSB standards are fit for purpose.”