At a symposium held in Montréal, Canada, by the International Sustainability Standards Board (ISSB), discussions focused on the creation of a “global baseline” of regulation for accounting standards. Mark Carney, the UN special envoy for climate action and finance and former central bank governor of the UK and Canada, emphasized the importance of this baseline for providing compatible information across different jurisdictions. He highlighted the need for regulatory harmony, particularly between the ISSB’s standards and those being developed by major regions like the EU, the USA, and Japan.
The EU is adopting a “double materiality” system, which goes beyond the ISSB’s focus on how environmental issues affect corporations, by also considering how businesses impact the environment. The aim is to align the materiality requirements of the ISSB and the EU’s European Financial Reporting Advisory Group (EFRAG) closely enough to allow for some mutual recognition of standards. The ISSB plans to release its S1 and S2 standards by June, coinciding with the European Commission’s timeline for finalizing its own standards, which could enhance compatibility.
During the symposium, Carney expressed hope that jurisdictions would adopt the core elements of the ISSB standards, S1 and S2, noting the high costs of not doing so. The UK has already indicated that ISSB standards will form a central component of its Sustainability Disclosure Requirements. Similarly, Abigail Ng from the Monetary Authority of Singapore mentioned that Singapore is considering adopting ISSB standards, underscoring the global interest in these regulations.
Sue Lloyd, ISSB vice-chair, mentioned the formation of a working group with members from the USA, EU, Japan, UK, and the International Organization of Securities Commissions (IOSCO), aimed at fostering a receptive environment for the ISSB baseline through public engagement in the standard-setting process. This is crucial, especially as the US Securities & Exchange Commission (SEC) charts its own path in sustainability reporting, which will influence how Canada’s new Canadian Sustainability Standards Board (CSSB) will integrate ISSB and SEC rules starting April 2023.
Martin Moloney, IOSCO secretary-general, highlighted the varied pace at which different jurisdictions might adopt ISSB standards, with some moving quickly to gain a first-mover advantage, while others may lag. The adoption process must consider the need for supplementary guidance, skill development, and funding for supervisors.
The overarching goal, as articulated by Moloney, is to facilitate capital flows by providing a common framework that allows analysts worldwide—from Montreal to Hong Kong—to assess securities against sustainability considerations, thereby enhancing transparency and comparability in sustainability data. In Southeast Asia, particularly vulnerable to climate change impacts, Abigail Ng stressed the importance of the ISSB global baseline for economic resilience, noting the need for a careful and inclusive approach to implementing these standards.
Source: https://www.internationalnewsservices.com/uncategorized/issb-pushes-for-its-standards-to-be-sustainability-reporting-global-baseline