A global securities watchdog on Tuesday formally backed new international company climate disclosures to help speed up international adoption and crack down on greenwashing.
Regulators are keen to replace a patchwork of voluntary private-sector norms with more rigorous rules overseen by regulators to stop companies from inflating their climate-friendly credentials.
Requested by the G20 economies, the International Sustainability Standards Board (ISSB) last month approved its first standards for companies to tell investors how climate change affects their operations from 2024.
"Investors are demanding better information about sustainability risks and opportunities," Jean-Paul Servais, chair of the International Organization of Securities Commissions (IOSCO), said in a statement.
Between 100,000 and 130,000 companies globally are likely to apply the standards, Servais told a news conference.
The watchdog comprises regulators from the United States, Japan, China, Germany, with member Britain already indicating it will make ISSB rules mandatory for listed companies.
"IOSCO now calls on its 130 member jurisdictions, regulating more than 95% of the world's financial markets, to consider ways in which they might adopt, apply or otherwise be informed by the ISSB Standards... in a way that promotes consistent and comparable climate-related and other sustainability-related disclosures for investors," IOSCO said.
The ISSB is part of the IFRS Foundation, responsible for writing financial accounting rules, which IOSCO endorsed two decades ago, lending them a credibility boost that led to mandatory adoption in over 140 jurisdictions.
IFRS Foundation Chair Erkki Liikanen said it was important to apply same rigour to sustainability as in accounting by externally auditing the disclosures.
The European Union and the United States, however, are writing their own corporate sustainability disclosure rules, though aligned in part with the ISSB's "baseline" norms to minimise duplication for companies that operate in many countries.
The EU's finalised sustainability reporting standards for 50,000 companies are due as soon as this week.
ISSB Chair Emmanuel Faber said the ISSB and EU would soon make a statement on "interoperability" between the two sets of norms, and that over 20 jurisdictions have indicated an interest or commitment to applying ISSB disclosures.
