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Securities Regulators to Ramp up Efforts on Sustainability Disclosures in 2021

IOSCO Board approves additional priority themes for 2021 as well as further work to promote consistent sustainable finance disclosures.

IOSCO, the global association for securities market regulators, has confirmed the main objectives for its Sustainable Finance Task Force and approved two additional priority themes for 2021, addressing risks in the NBFI sector and those arising from the Covid-19 pandemic.

At IOSCO’s 45th Annual Meeting last week, attended by some 480 members from 159 jurisdictions, members discussed the body’s existing priority work, which focuses on sustainable finance, financial stability risks, market fragmentation, asset management and retail market conduct.

On sustainable finance, the IOSCO Board discussed efforts toward a consistent and comprehensive framework that builds on the current global initiatives on corporate disclosures by an alliance of international sustainable finance standard setters, together with IFRS Foundation proposals for a standard setting mechanism.

The Board agreed that the IOSCO Sustainable Finance Task Force should:

  • further explore pathways to mandatory disclosure beyond comply or explain requirements;
  • engage with the IFRS Foundation to ensure that any proposals stemming from the consultation paper meet securities regulators’ expectations in terms of content and governance; and
  • advance discussions regarding the establishment of an assurance framework for sustainability disclosures.

The Board also discussed the Sustainable Finance Task Force’s other work on sustainability-related disclosures, greenwashing and the increasing activity of ESG data providers and credit rating agencies regarding ESG ratings.

The IOSCO Board also approved two additional priority themes for 2021, including financial stability and systemic risks in NBFI (non-bank financial intermediation); and risks remote working, misconduct risks, fraud and scams, and operational resilience in the context of the Covid-19 pandemic.

The Board approved a report aimed at assisting IOSCO members in addressing emerging conduct issues in retail markets arising from the pandemic and other similar crises. The report identifies the common drivers of this misconduct and actions taken by firms and regulators to mitigate risks and retail investor harm.

The Board also agreed to undertake further work on:

  • good practices or recommendations for audit committees on goodwill impairment;
  • potential valuation-related issues in financial reporting, auditing and disclosures; and
  • the impact of Covid-19 on secondary trading market microstructure mechanisms, the operations of trading venues and business continuity planning

Another five members were recognized as signatories to the IOSCO EMMoU, including regulators from Astana, Alberta, Dubai, Peru and Switzerland.

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