The International Organization of Securities Commissions (IOSCO) is the global standard setter for securities regulation. It has 130 member jurisdictions and regulates more than 95% per cent of the world’s financial markets.
In a significant development for global sustainability reporting, on 25 July 2023, IOSCO announced that it has endorsed the sustainability-related financial disclosures standards, IFRS S1 General Requirements for Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
This endorsement comes after two years of engagement with the International Sustainability Standards Board (ISSB) and a comprehensive and independent review of the ISSB standards (currently IFRS S1 and IFRS S2). It means that IOSCO considers ISSB standards an appropriate global framework:
- For capital markets to develop sustainability-related financial disclosures for capital raising and trading
- To help globally integrated financial markets accurately assess relevant sustainability risks and opportunities.
Calls to members to adopt or apply ISSB standards
IOSCO is calling on its members to consider how they can adopt the ISSB standards or use them to develop sustainability reporting standards in their own countries. This will promote consistent and comparable climate-related and other sustainability-related disclosures for investors.
IOSCO’s endorsement of the ISSB standards is an important milestone for sustainability reporting because it provides confidence to jurisdictions wanting to adopt sustainability-related financial disclosures quickly. We, therefore, expect to see fast-paced legislative change, with mandatory sustainability reporting in most IOSCO member countries in the next few years.
What does this mean for Australian entities?
Australia is already on a path to mandatory sustainability reporting, with reporting likely to be compulsory for larger entities in 2024-2025, and smaller entities in 2026-2027 or 2027-2028. IOSCO’s endorsement is also likely to hasten the adoption of ISSB standards by other countries, which could have a flow-on effect if Australian entities are subsidiaries of overseas entities that require earlier reporting.
How BDO can help
No matter where you are on your sustainability journey, our national team of sustainability experts can help with:
- Sustainability reporting
- Developing your sustainability strategy
- Carbon footprint calculations or mandatory climate-related disclosures
- Carbon emission reduction strategies
- Assurance over your carbon footprint or sustainability reporting.
Contact us today.