A step change in sustainability reporting, says IOSCO’s Alder
If you’re following developments in the international efforts to develop global environmental, social and governance (ESG) reporting standards and a Sustainability Standards Board (SSB), you may be interested in a recent interview in ESG Investor on ‘Making Climate Data Comparable’ with Ashley Alder, Chair of the International Organization of Securities Commissions (IOSCO). IOSCO is a strong supporter of the SSB; as he observes, “without good corporate-level information, investors and asset management firms are operating with one hand tied behind their back in attempting to allocate capital across industries taking sustainability issues into account when the information is so disparate.”
While recognising the large number of pieces of the jigsaw that need to come together, Alder believes that – following a climate-first approach – a global reporting standard for climate could be endorsed by IOSCO, adopted and on the road to enforcement by regulators within a year. He holds that the prototype standard published in December 2020 by the ‘group of five’, building on the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD), represents a step change that can be seen as the first very significant global convergence. One interesting point about climate risks, that will feed into standards, is that investors need companies to look ahead at ‘what-if’ projections. “There are important aspects of sustainability financial disclosures which are, because they are forward looking, quite different to traditional financial statements,” says Alder.
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