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LGIM backs call for IOSCO to foster harmonised climate risk reporting

One of the world’s largest asset managers has backed calls for global standard setter IOSCO to play its role in ensuring the usefulness of climate risk reporting for global investors.

The International Organization of Securities Commissions (IOSCO) was “ideally placed” to accelerate progress on climate risk reporting, according to Meryam Omi, head of sustainability and responsible investment strategy at €1.1trn Legal & General Investment Management (LGIM).

Despite “undeniable” momentum behind support for the work of the Taskforce on Climate-related Financial Disclosures (TCFD), the usefulness of climate reporting depended on expanding harmonisation and standardisation across different jurisdictions, she said.

“As a major global investor, we would like to call on IOSCO to acknowledge the TCFD recommendations and encourage their incorporation into international listing standards,” added Omi.

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IOSCO is the international body bringing together securities regulators.

LGIM’s Omi was writing in a foreword to a report by three non-profit organisations calling for other investors to encourage IOSCO to act to harmonise climate risk reporting.

“IOSCO occupies the most favourable position for action at a global scale, and should be a key target of investor-led initiatives seeking to ensure harmonised climate risk reporting,” said the report.

“IOSCO has remained silent on this issue since the release of the recommendations – but investors have a strong basis for demanding action either through activating national securities regulators to engage with IOSCO on their behalf, or through engaging IOSCO directly.”

The report was produced by activist law firm ClientEarth, think tank CarbonTracker, and conservation campaign group WWF.

According to the authors, there was a risk that reporting in line with the TCFD recommendations would be an “EU phenomenon”, which could lead to regulatory divergence with other regions in terms of climate risk disclosure and corporate governance practices. 

This, in turn, would make it difficult for investors with a global portfolio to accurately assess risk and allocate capital, they argued.

The report identified different ways in which IOSCO could promote harmonised climate risk reporting and widespread implementation of the TCFD recommendations, and how investors could push for such action from the body.

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