In a landmark move, the International Organization of Securities Commissions (IOSCO) has officially endorsed the International Sustainability Standards Board’s (ISSB) Standards, following a rigorous and comprehensive review. The ISSB, established in November 2021, aims to provide a global baseline for sustainability-related disclosure, particularly for the world’s capital markets.
With its endorsement, IOSCO is calling upon its 130 member jurisdictions—comprising capital market authorities that regulate over 95% of the world’s securities markets—to consider incorporating the ISSB Standards into their regulatory frameworks. The objective is to achieve consistency and comparability of sustainability-related disclosures on a global scale.
The endorsement from IOSCO carries significant weight and signifies that the ISSB Standards are deemed suitable for capital market use. It also paves the way for sustainability-related risks and opportunities to be factored into market pricing effectively. Additionally, it is expected to streamline data collection and analysis processes, leading to enhanced decision-making across markets.
Notably, this endorsement holds particular importance for growth and emerging markets, constituting 75% of IOSCO’s membership. The move is anticipated to encourage these markets to align with international sustainability standards, promoting a more sustainable and responsible approach to finance and investment.
This announcement comes at a pivotal moment as various jurisdictions worldwide are considering adopting the ISSB’s first two Standards, IFRS S1, and IFRS S2, with some contemplating making them mandatory. Just as IOSCO’s endorsement of IFRS Accounting Standards over two decades ago proved pivotal in their global adoption, it is expected that this endorsement will similarly drive comprehensive incorporation of ISSB Standards.
In conjunction with the endorsement, the IFRS Foundation has published a high-level roadmap that provides insights into its strategy for supporting the adoption of ISSB Standards by jurisdictions. The roadmap aims to enhance transparency and understanding of the IFRS Foundation and the ISSB’s goals. It acts as a precursor to an Adoption Guide for regulators, which is expected to be finalized later in 2023.
Emmanuel Faber, the ISSB Chair, expressed enthusiasm for the widespread regulatory adoption of a global baseline for sustainability-related disclosures, stating that it would ensure consistency and comparability of information demanded by capital markets. Faber commended IOSCO’s endorsement and expressed dedication to delivering an inclusive capacity-building program to drive global progress.
Erkki Liikanen, Chair of the IFRS Foundation Trustees, emphasized the importance of aligning the sustainability disclosure landscape and reducing fragmentation in initiatives. He credited IOSCO for encouraging the establishment of the ISSB and acknowledged their continued oversight through the IFRS Foundation Monitoring Board, which played a pivotal role in securing the endorsement.
With this historic endorsement, the path towards comprehensive global adoption of sustainability-related disclosure standards seems more assured than ever. The ISSB, backed by IOSCO and its network of regulatory authorities, is set to lead the way in creating a sustainable and responsible financial ecosystem that benefits investors, companies, and the planet alike.
