Finalizing ethical and assurance standards is essential to the successful adoption of global sustainability disclosure standards by issuers and regulators around the world by the end of 2024, the International Organization of Securities Commissions (IOSCO) says.
IOSCO, the umbrella group of global regulators, issued a statement detailing its feedback on the proposed international standard on sustainability assurance, which was released for consultation earlier this year.
Among other things, IOSCO said it supports the general approach taken in the proposed standard, and aimed to provide feedback from the capital markets persepctive.
In its statement, IOSCO called for the standard to be detailed enough to be implemented widely and consistently, and for added practical guidance to help issuers and regulators adhere to the standards.
It also specifically called for caution on references to greenwashing in the standard.
“Recognizing that ‘greenwashing’ is not a defined term and that it may occur independently of fraud, we encourage caution and clarity in the use of this terminology in the final standard,” it said.
Earlier this year, IOSCO formally endorsed the first set of proposed sustainability disclosure standards from the International Sustainability Standards Board (ISSB).
In its statement, IOSCO said it believes that adopting assurance (and ethical) standards is “a prerequisite for achieving consistently prepared and independently assured sustainability disclosures by issuers of securities across the globe.”
Finalizing ethical and assurance standards “may enhance the consistency, comparability and reliability” of the sustainability disclosures that issuers provide to the market, it said.
IOSCO noted it has closely analyzed the proposed assurance standards, reviewed other feedback, and engaged with the International Auditing and Assurance Standards Board (IAASB), which drafted the proposed standard.
“We hope the IOSCO’s observations support a timely finalization of the standard and promote an effective global sustainability assurance standard,” it said.
“This is an important moment in enhancing trust in the sustainability information disclosed to investors,” said Rodrigo Buenaventura, chair of IOSCO’s sustainable finance task force, in a release.
“IOSCO has reviewed the draft standard from a global capital markets perspective considering the issues of market integrity, investor protection … and will continue to engage proactively with the IAASB on this journey,” he said.
“The task ahead is not easy, but it is of crucial importance that market participants and others have their say in the consultation, and that the standard is suitable for all assurance providers, responsive to public interest and finalized in a timely manner,” said Jean-Paul Servais, chair of the IOSCO board.