Asia-Pacific

IOSCO Forms Working Group to Aid IFRS Sustainability Project

MAS and US SEC will co-lead the new technical working group, which will help develop technical recommendations needed for new sustainability reporting standards.

The International Organisation of Securities Commissions (IOSCO) has announced the establishment of a new Technical Expert Group (TEG) under its Sustainable Finance Task Force (STF), which will work closely with the IFRS Foundation’s working group on its sustainability project.

The new TEG will be tasked with reviewing and assessing technical recommendations focused on enterprise value creation, in light of the IFRS Foundation Trustees’ recent announcement of the formation of a working group to prepare for a potential international Sustainability Standards Board (SSB).

IOSCO welcomes the invitation to join this IFRS working group as an observer and says it looks forward to collaborating on the development of technical recommendations, including planned work to further refine the prototype climate-related disclosure standard, its content, and 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 serve as a baseline for consistent and comparable approaches to mandatory sustainability-related disclosures across jurisdictions.

Such a reporting standard will be compatible with existing accounting standards, promote good governance of sustainability-related disclosures, and form the basis for the development of an audit and assurance framework, IOSCO said.

The TEG will be co-led by the Monetary Authority of Singapore (MAS) and the US Securities and Exchange Commission (SEC). It will also comprise sustainability reporting technical specialists from within the STF and the leadership of IOSCO’s policy committee on issuer accounting, auditing and disclosures.

IOSCO expects that the TEG will complete its initial assessment of the technical recommendations and refinements to the prototype before COP 26 in November 2021.

IOSCO also said it looks forward to continued dialogue with the Trustees as they explore the establishment of a multi-stakeholder expert consultative committee within the IFRS Foundation structure. This is seen as a “promising mechanism “to support the practical delivery of the ‘building blocks’ of a global comprehensive corporate reporting system.

“In particular, such a committee could play a key role in fostering ongoing international coordination between enterprise value-focused sustainability reporting standards issued by the SSB and any complementary standards related to additional sustainability reporting.”

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