IOSCO targets greenwashers

The International Organization of Securities Commissions has put the creation of the IFRS International Sustainability Standards Board front and center of its 2022 planned work with an update on draft proposals expected imminently. 

Announced at COP26, the International Financial Reporting Standards Foundation is setting a global baseline for company reporting on a wide range of sustainability issues with the ISSB.

A board meeting on March 9 outlined IOSCO’s Sustainable Finance work plan and put mitigating greenwashing, increasing transparency and creating reliable information on sustainability impacts for investors at the top of the agenda.

Part of this is the draft proposals on sustainability disclosure requirements within the ISSB, a “timely and thorough review” of these and publication of final standards. If IOSCO determines the IFRS Sustainability Standards are fit for purpose, its decision would provide all 140 IOSCO member jurisdictions with the basis to decide how they might adopt, apply or be informed by the ISSB standards, a statement said.

“IOSCO has an immense set of tasks ahead of itself in 2022," said Erik Thedéen, chair of IOSCO’s Sustainable Finance Task Force and head of the Swedish regulator. "Our work on endorsing the ISSB standards is part of a wider push by IOSCO to professionalize all aspects of sustainable finance. The Task Force IOSCO has asked me to lead will work intensively in 2022 to deliver across a range of key issues which have to be worked out if markets are to gear up to supporting investors’ desire to invest in ESG.”

Further, IOSCO is committed to pushing forward its development with assurance standards as a key element of building trust in sustainability reporting, and carrying out a review of carbon markets to assess vulnerabilities, transparency and integrity.

It will also step up its engagement with regulators and market participants to address the recommendations around ESG ratings and data providers.

“IOSCO has explained very clearly to market participants how greenwashing can be avoided," said Rodrigo Buenaventura, head of the Spanish regulator and one of the leaders of this part of IOSCO’s workplan. "We need everyone in the securities sector to work with us now to promote good practices and call out greenwashing. Building trust through high standards of behavior is critical so that investment products described as sustainable actually are.”