The British Standards Institution has launched a sustainable finance standard to help ‘demystify’ principles for the market.
The British Standards Institution (BSI) supported by the International Organisation for Standardisation (ISO) has this week launched a new sustainable finance standard.
Speaking to ESG investor, Martin Townsend, Global Head of Sustainability and Circular Economy at BSI, said it picked up the challenge of writing the standard as the market place was complicated. The BSI said guidance in the standard is designed to ‘demystify’ sustainability principles for financial sector organisations.
“So, there’s lots of regulations. There’s lots of different tools and lots of conversations. What’s we’re trying to do with the standard is make sure that we simplify that and actually help people learn from best practice,” Townsend said.
He added that the sustainability market had broadened in dimension and it was important, “to get common principles and common understanding to make sure that everybody follows the same lexicon”.
BS ISO 32210 contains advice for embedding sustainability into governance and culture, and strategy alignment and objectives where it recommends the adoption of a governing body approved sustainability policy or similar statement.
The standard also covers impact assessment, stakeholder engagement, monitoring, measuring and metrics, as well as reporting, transparency and assurance.
BSI’s new standard for sustainable finance sits alongside a growing number of principles, labels and standards focused on sustainability. Townsend said BSI’s standard differed in focusing on the “how” and that it would align with other tools and regulations in the marketplace.
BSI’s standard for sustainable finance is also aligned with the Paris Agreement and the UN SDGs.
Townsend explained that all ISO standards are set to align with the Paris Agreement as a result of the ‘London Declaration’ in 2021. He said the BSI was now working through every single one of the 30,000 ISO standards to make sure they meet the Paris Agreement. “And if they don’t or can’t, they will be deleted,” he noted.
He said the sustainable finance standard would additionally be aligned with the UN SDGs, “to provide the tools of what a sustainable society will look like in the future”.
Nigel Topping, the former UN High-Level Climate Action Champion, has welcomed the standard. He said: “Ensuring all in the financial sector are talking the same language and tackling the heart of the issue is essential.
“Standards play an ever-increasing role in issues with a global impact and relevance; I saw first-hand at COP27 with the work that BSI has done around the Net Zero Guidelines, which were a significant step forward. This new standard will drive change and help embed sustainability in the global financial sector.”
Tim Mohin, the former Chief Executive of the Global Reporting Initiative and a Partner at Boston Consulting Group, also welcomed the new ISO standard. He said it would be “additive” to have a new standard on top of hard and soft law on sustainability. “It’s helpful to have substance on what needs to be collected, disclosed and made transparent to support a claim of ESG or sustainability.
“I’ve been telling clients for some time now that the age of greenwashing is over and it will no longer be easy for companies and financial institutions to make claims that cannot be supported.”
