ISSB suggests stricter rules to check greenwashing

The International Sustainability Standards Board (ISSB) has floated a new set of guidelines for ESG-related reporting. The guidelines were issued at the Annual Conference of the IFRS Foundation. The standard will globally impact the assets worth trillions of dollars that claim their environmental, social, and governance credentials.

Under an updated set of G20-backed worldwide guidelines aimed at assisting regulators in cracking down on greenwashing, companies will face increased pressure to declare how environmental damage affects their business.

Individual countries will determine whether they want listed businesses to implement the criteria, according to ISSB Chair Emmanuel Faber, who added that the standards can be applied to annual reports beginning in 2024. According to Faber, Canada, the United Kingdom, Japan, Singapore, Nigeria, Chile, Malaysia, Brazil, Egypt, Kenya, and South Africa are all considering using them. The requirements are based on voluntary guidelines developed by the G20 Task Force on Climate-related Financial Disclosures (TCFD).

The United Kingdom was the first large economy to adopt mandatory TCFD disclosures for publicly traded corporations. “We have committed to including reporting against UK-endorsed variants of the IFRS sustainability information guidelines announced today,” UK Treasury Minister Joanna Penn said at the standards’ launch event. The ISSB is a member of the autonomous international financial reporting standard-setting Foundation, which also creates accounting rules used in over 100 countries, and the global securities watchdog IOSCO is anticipated to “endorse” the new standards.

In the following months, the ISSB and the EU will offer guidelines on avoiding duplication.