IOSCO chair: ISSB standards 'fit for purpose'

The endorsement of the International Sustainability Standards Board’s (ISSB) standards by global securities association IOSCO will instil trust among stakeholders in the standards, according to the organisation’s chair, Jean-Paul Servais.  

In June 2023, the ISSB published its first two standards, IFRS S1 and IFRS S2, outlining requirements for both financial and climate-related sustainability disclosures respectively.   

 “Investors are demanding better information about sustainability risks and opportunities, and the G20, the G7, and the FSB rely on IOSCO to assess whether the ISSB Standards are fit for purpose for capital markets,” Servais said during an ISSB and IOSCO webinar on Tuesday (July 25th). 

He added that members worked together to examine the ISSB’s standards in light of IOSCO’s endorsement criteria.  

“IOSCO has found that the ISSB conducted a robust process and have concluded that these standards serve as an effective and proportionate global framework of investor-focused disclosures on sustainability and climate-related risks and opportunities,” he said.    

Reacting to the endorsement, Emmanuel Faber, chair of the ISSB, said the support from ISOCO means the standards are now co-owned by the community of regulators globally.    

“It’s just not about setting standards in an efficient and timely manner, but it’s really about working with them [various jurisdictions] in adopting this language. This is going to be a collaborative effort, and we will collaborate with IOSCO and a number of other partners for this.”    

IOSCO currently covers 130 jurisdictions, meaning that it supervises 95% of financial markets, and Faber believes this means the standards are “truly inclusive in terms of co-ownership”.  

ISSB standards a sustainability ‘toolkit’    

The complexities of ESG reporting have been referred to as an alphabet soup due to the various voluntary reporting frameworks available.  

Servais went on to highlight that this wealth of different frameworks not only poses a challenge to institutional investors, but to retail investors too. 

Such investors are looking for one set of sustainability standards they can adhere to globally, but they desire to have this option quickly, he noted.    

“That’s the reason why speed was so important, and that’s the reason why we decided in June two years ago to have the standards. I would say the speed was incredible when you have to discuss, manage, perform, and have an agreement about a sustainability reporting standard.”  

The endorsement of the ISSB standards aligns with IOSCO’s objective to establish a comprehensive toolkit encompassing sustainability-related disclosure and assurance standards. IOSCO targets to have the toolkit available to jurisdictions and be readily accessible for issuers to utilise in their end-2024 accounts.