IOSCO announced that it has established a Technical Expert Group (TEG) to undertake an assessment of the technical recommendations to be developed as part of the sustainability project of the IFRS Foundation. The TEG will be co-led by MAS and the U.S. SEC and will comprise sustainability reporting technical specialists from within the Sustainable Finance Task Force and the leadership of IOSCO´s policy committee on issuer accounting, auditing, and disclosures. In addition, IOSCO welcomed the announcement from the Trustees of the IFRS Foundation on the formation of a working group to undertake technical preparation for a potential international Sustainability Standards Board (SSB) under the governance of the IFRS Foundation. IOSCO also welcomed the invitation to join this group as an observer.
IOSCO looks forward to collaborating with the working group as it develops its technical recommendations, including planned work to further refine the prototype climate-related disclosure standard (the prototype) as a basis for the SSB to build on existing initiatives in its standards development. IOSCO states that this responds to the pressing investor need for globally consistent, comparable, and reliable sustainability disclosure standards. IOSCO also looks forward to continuing its dialog with the Trustees as they commence work to explore the establishment of a multi-stakeholder expert consultative committee within the IFRS Foundation structure. IOSCO continues to see a consultative committee as a promising mechanism to support the practical delivery of the "building blocks" of a global comprehensive corporate reporting system.
The new TEG of IOSCO has been established under the Sustainable Finance Task Force. The TEG will work closely with the IFRS Foundation’s working group and will be tasked with reviewing and assessing its technical recommendations focused on enterprise value creation. As part of this, the TEG will assess refinements to the prototype and its content, including industry-specific metrics. The TEG will consider whether the refined prototype could be a sound basis for the development of an international reporting standard under the SSB, with a focus on enterprise value, that will:
- meet the capital market’s core information needs and serve as a baseline for consistent and comparable approaches to mandatory sustainability-related disclosures across jurisdictions.
- be compatible with existing accounting reporting standards and promote good governance of sustainability-related disclosures among preparers.
- form the basis for the development of an audit and assurance framework.
IOSCO views the proposed SSB and its future standards as a promising solution for achieving consistent, comparable, and reliable cross-border sustainability-related reporting requirements and would encourage IOSCO members and relevant authorities to consider the standards when setting sustainability-related disclosure requirements. In the course of its work, IOSCO will seek opportunities to gather the views of global stakeholders and market participants on the prototype and its content. In light of the urgent need to improve the consistency, comparability, and reliability of sustainability-related disclosures across jurisdictions, IOSCO expects that the TEG will complete its initial assessment of the technical recommendations and refinements to the prototype before COP26, the United Nations Climate Change Conference, in November 2021.
Related Link: Press Release (PDF)
Keywords: International, Banking, Insurance, Securities, Climate Change Risk, ESG, Disclosures, Reporting, IFRS, Sustainable Finance, COP26, Sustainability Standards Board, IOSCO
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous ArticleHKMA Issues Interim Reporting Guidance for IRRBB Returns
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.