For the financial markets to play their role, the disclosure of comprehensive and comparable sustainability-related disclosure would be of paramount importance and since there are currently wide gaps in the disclosure requirements, the public authorities would need to step in.

He then discussed why and how IOSCO is involved:

1. IOSCO is involved because enterprise value reporting is part of its mandate to promote investor protection and IOSCO’s members can enforce sustainability reporting and help prevent greenwashing by market participants.
2. IOSCO is also involved because of its role in the oversight of the governance of the IFRS Foundation and will monitor the governance implications of the IFRS Trustees’ proposals on sustainability.
3. And IOSCO can play a critical role in adding momentum to the IFRS initiative and in fostering endorsement of the new standards around the world.

Mr Servais stressed that IOSCO encourages a “building blocks” approach to establishing a global sustainability reporting system and limiting undue fragmentation as much as possible. By working with standard-setters from key jurisdictions, the new IFRS sustainability board’s standards would provide a globally consistent and comparable sustainability-reporting baseline. The building blocks approach would then allow jurisdictions to go further and faster if they wish, while retaining cross-border comparability. He added:

In this respect, I believe there is consistency between the IFRS/IOSCO approach and the EU’s thinking on international cooperation. The EU cannot achieve the green transition alone. It needs other countries to share its ambition and work in the same direction. Greater international alignment on ESG-related disclosures will increase global transparency. It will also reduce the due-diligence costs for global investors and the administrative costs of companies operating globally.

Mr Servais then turned to the European Commission initiative and the proposal for a Corporate Sustainability Reporting Directive (CSRD). He welcomed that the Commission has clarified that-the EU standards should aim to incorporate the essential elements of globally accepted standards currently being developed and would build on and contribute to standardisation initiatives at global level. He noted that he expected the first IFRS standard in mid-2022 and welcomed that the draft Directive clarified that EU standards "should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation”.

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