New global rules aim to clamp down on corporate greenwashing
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Some 42 per cent of the world’s top 4,000 companies currently do not provide data on Scope 1 and 2 carbon emissions.
PHOTO: ST FILE
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LONDON - Companies will face more pressure to disclose how climate change affects their business under a new set of Group of 20-backed global rules aimed at helping regulators crack down on greenwashing.
The norms published on Monday have been written by the International Sustainability Standards Board (ISSB) as trillions of dollars flow into investments that tout their environmental, social and governance (ESG) credentials.
It would be up to individual countries to decide whether to require listed companies to apply the standards, ISSB chair Emmanuel Faber said.
He added that the standards can be used for annual reports from 2024 onwards.
Canada, Britain, Japan, Singapore, Nigeria, Chile, Malaysia, Brazil, Egypt, Kenya and South Africa are considering their use, he said.
The ISSB standards will be building on voluntary ones from the Group of 20’s Task Force on Climate-related Financial Disclosures (TCFD).
Britain was the first major economy to make TCFD disclosures by listed companies mandatory.
The ISSB is part of IFRS, the independent foundation which also writes accounting rules used in more than 100 countries, while global securities watchdog IOSCO is expected to “endorse” the new standards.
“It just brings more rigour, is much more aligned with financial reporting,” said Mr David Harris, head of sustainable finance strategic initiatives at London Stock Exchange Group.
He said 42 per cent of the world’s top 4,000 companies currently do not provide data on Scope 1 and 2 carbon emissions.
“It means capital markets are far less effective because you haven’t got a full picture,” said Mr Harris. Under the ISSB rules, companies would need to provide disclosure on material emissions, with checks by external auditors.
The European Union finalises its own disclosure rules in July, and it and the ISSB have sought to make each other’s norms “interoperable” to avoid duplication for global companies.
The ISSB requires more detailed disclosures from banks on carbon emissions related to individual sectors such as oil and gas.
“We maintain that because banks and banking supervision were really clear that it is needed for them,” said Mr Faber.
The ISSB and EU are set to issue guidance on avoiding duplication in the coming months. REUTERS
