Global regulators adopt plan for greenwashing, standards

Global securities regulators are planning to step up their fight against greenwashing and push the development of sustainability reporting standards.

Following a board meeting last week, global regulator umbrella group the International Organization of Securities Commissions (IOSCO) announced that it has adopted a “far-reaching 2022 work plan” focused on developing sustainable finance.

At the top of the list are efforts to combat greenwashing and to enhance climate-related risk disclosure.

“IOSCO has explained very clearly to market participants how greenwashing can be avoided. We need everyone in the securities sector to work with us now to promote good practices and call out greenwashing,” said Rodrigo Buenaventura, head of the Spanish regulator, in a statement.

“Building trust through high standards of behaviour is critical so that investment products described as sustainable actually are,” he added.

To that end, IOSCO said it’s planning to analyze draft climate and sustainability reporting standards from the newly established International Sustainability Standards Board (ISSB), which are expected to be published this year.

IOSCO said that if it determines those standards “are fit for purpose, its decision would provide all 140 IOSCO member jurisdictions with the basis to decide how they might adopt, apply or be informed by the ISSB standards.”

The Canadian Securities Administrators (CSA) are currently consulting on proposed disclosure requirements for issuers that are modelled on the recommendations of the Task Force for Climate-Related Financial Disclosures (TCFD).

The comment period on that consultation wrapped up last month, attracting a large, diverse volume of feedback to regulators. While some endorsed the CSA’s proposed approach, others criticized it as too lax, particularly in terms of mandating specific disclosures and not requiring companies to engage in scenario analysis.

In the wake of that consultation, it remains to be seen how the Canadian regulators will proceed.

In the meantime, IOSCO said it intends to work on developing assurance standards for sustainability reporting, noting that it has “identified independent assurance of the quality of corporate reporting of sustainability information as a key element of building trust in sustainability reporting.”

Additionally, the group plans to undertake a review of carbon markets from a regulatory perspective, and to push for standards in asset management, ESG ratings and data providers.

“Our work on endorsing the ISSB standards is part of a wider push by IOSCO to professionalize all aspects of sustainable finance,” said Erik Thedéen, chair of IOSCO’s sustainable finance task force and head of Sweden’s regulator.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.