IOSCO Develops New Work Plan for Sustainable Finance

The International Organization of Securities Commissions (IOSCO) aims to improve impact information for investors and mitigate greenwashing as part of a new commitment on sustainable finance.

The organization — a collaboration of representatives from 130 national and regional regulators — is to develop a new work plan for sustainable finance, it announced this week. 

At a meeting on March 9, IOSCO’s board discussed the importance of providing reliable information on sustainability impacts for investors, as well as approaches to reducing greenwashing by product providers and securities issuers. 

Ashley Alder, IOSCO chair and head of Hong Kong’s Securities & Futures Commission, said: “Our work plan for 2022 is very ambitious, but it is of utmost importance that the regulatory community steps up its efforts in ensuring markets contribute positively to sustainability challenges, in a way that secures the integrity of financial markets and the protection of investors.”

As demand for sustainable finance and ESG products continues to increase, the quality of reporting is now a top priority for corporates, investors, and regulators.

IOSCO said it would review the International Financial Reporting Standards (IFRS) board’s new Sustainability Disclosure Standards to determine if they are fit for purpose, alongside independent work to develop assurance standards. 

The organization also committed to an in-depth review of carbon markets to identify the vulnerabilities in this emerging area.

Rodrigo Buenaventura, head of Spanish regulator CNMV, said IOSCO had “explained very clearly” how market participants could avoid greenwashing. 

“We need everyone in the securities sector to work with us now to promote good practices and call out greenwashing,” he stated. “Building trust through high standards of behavior is critical so that investment products described as sustainable actually are.”

In addition, IOSCO will also step up its engagement with national regulators and market participants to push for the implementation of its recommendations for asset management and ESG ratings and data providers.