Institutional investors call for greater alignment of sustainability standards

Institutional investors have joined corporates and accountants in calling for greater alignment across sustainability reporting standards being developed by standards setters and regulators.

Overall, a total of 65 organisations said standard-setting efforts should “more closely align with and support a global baseline for reporting sustainability-related information”.

They added that current draft standards and initiatives “are not technically compatible in terms of concepts, terminologies, and metrics”.

The endorsed statement was developed jointly by the World Business Council for Sustainable Development (WBCSD), the Principles for Responsible Investment (PRI), and the International Federation of Accountants (IFAC).

Investor signatories included Brunel Pension Partnership, Desjardins Global Asset Management, GAM Investments, Newton Investment Management and Wespath Benefits and Investments.

In addition to formal consultation responses, this public statement makes clear the momentum and encouragement behind stronger alignment between sustainability standard-setting efforts.

Both the International Sustainability Standards Board and the European Financial Reporting Advisory Group, which advises the European Commission, recently consulted the market on their draft standards for sustainability-related disclosures.

The US Securities and Exchange Commission is also in the process of finalising its rules for climate-related disclosures for US-listed firms.

The aim is to address the need to enhance and evolve corporate reporting to include and consider sustainability information. However, current draft standards and initiatives are not technically compatible in terms of concepts, terminologies, and metrics.

As these proposed sustainability-related disclosure requirements are refined and finalised, leading financial market participants are asking financial market regulators to avoid regulatory and standard setting fragmentation by aligning on key concepts, terminologies, and metrics on which disclosure requirements are built.

A comprehensive global baseline of sustainability disclosures is seen as necessary for  reporting entities to avoid undue burden and for investors to make investment decisions that truly contribute to sustainable outcomes.

©Markets Media Europe 2022

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