The peak body for global regulators, the International Organisation of Securities Commissions (IOSCO), has backed the creation of the single global sustainability reporting standards body.
Corporate plods appear rather excited about this at the moment because they have said there is an “urgent need” for a single set of “globally consistent, comparable and reliable sustainability disclosure standards”.
This might seem rather anodyne; it is, however, important because IOSCO speaks for regulators across the world when it comes to a general policy direction.
The support for a single sustainability reporting standard setting body also matters because it means that IOSCO and its member agencies have thought about implications of such harmonised regulation in the global market place.
What are the things that IOSCO says matter to them in the context of sustainability reporting?
Globally consistent standards matter, according to IOSCO, and they are keen to see one body of sustainability standards developed. This will sound familiar to those that remember an IOSCO conference back in the early 2000s when the global regulators gave the thumbs up to the development of international accounting standards under a new structure independent of the accounting profession’s global body, IFAC.
The recommendation for a globally consistent set of standards is consistent for IOSCO and means that global regulators will have the same guidance to enforce.
IOSCO wants comparable metrics and narratives so that there is a way in which people can compare entities across industries and within jurisdictions and across the globe. This is a good and sound objective, but it comes with a range of challenges such as enforcement of metrics across jurisdictions.
A third criteria that IOSCO specifies is that there should be coordination across approaches such as the appropriate incorporation of elements of standards in the right place. There might need to be some integration between accounting standards and sustainability standards.
There you go. IOSCO has a bunch of stuff that it wants a standard setter to do but one needs to be established first.
This is a major step forward, but it requires a fair amount of work and that includes setting a standard setter up in the first instance.
IOSCO wants people to use other existing frameworks as a basis. This work is already occurring as professionals that have bathed themselves in narrative reporting frameworks for several decades know that eventually things need to merge.