The International Standards Organisation (ISO) has launched formal “guidance on the application of sustainability principles in the financial sector” to help investors align their strategies with regulation and mitigate greenwashing risks.
Developed by the British Standards Institute (BSI), the new guidance identifies seven areas where financial institutions should integrate sustainability:
- governance and culture;
- assessment of risks, opportunities and impacts;
- stakeholder engagement;
- metrics and measurement;
- reporting and assurance; and
- improving ambitions over time.
BSI said that banks, insurers, investors and service providers can use relevant parts of the new standard to integrate sustainable finance principles into their operations, products and services. It can also be used by regulators.
Martin Townsend, the director of BSI’s Centre of Excellence for Sustainability, told IPE that the standard launches amid “a confusing landscape of emerging sustainability initiatives, regulation and dynamic external factors”.
“We’ve simplified this by providing principles and guidelines to complement and cut through the confusion, ultimately supporting the development of a sustainable finance sector that benefits society as a whole.”
The guidance is the result of a five-year partnership between the BSI, the City of London’s then Green Finance Initiative and the UK’s now-defunct government department for Business Energy and Industrial Strategy. The project, kicked off in 2018, aimed to “define globally applicable standards for the finance sector”.
BSI has committed to embed climate science into every new or revised standard it creates.
ISO is made up of 167 national standard setting bodies. Once a standard has been developed by one of its members, it has to be signed off by peers before becoming an international standard.