A new global board for setting climate-related company disclosures aims to publish its first batch of standards by the middle of next year, officials leading the project said on Friday.
The London-based International Financial Reporting Standards Foundation (IFRS) has been asked by governments and financial regulators to set up the new body for writing standards on how listed companies should disclose risks from climate-change on their operations.
They want a consistent, single set of global norms to replace the current patchwork of public and private-sector approaches that make it harder for investors to compare companies and stop ‘greenwashing’ by corporates enhancing their green credentials.
“The goal would be by mid 2022 to have something on climate,” IFRS executive director Lee White told Reuters.
The initial batch of standards will adapt existing norms set by global regulators from the Task Force on Climate-related Financial Disclosures (TCFD), already being used voluntarily by some companies.
“We want to consolidate what is out there, we are providing a running start,” Lucrezia Reichlin, an IFRS trustee who is leading the work of the Sustainability Standards Board (SSB), told Reuters.
The SSB would set voluntary, minimum global standards and it would be up to each member country to decide how they would be applied. This ‘building block’ approach allows countries to enhance the SSB standards, if they want to.
The SSB will have at least a chair and vice chair, perhaps even a full suite of board members, in time for the UN COP26 climate change conference in Scotland in November that will be attended by world leaders, Reichlin said.
The IFRS was approached because of its experience in writing accounting rules used in over 140 countries, but that took many years and needed the critical mass of European Union backing.
Supporters so far include the International Monetary Fund, Britain, the UN, and global financial regulatory bodies like IOSCO and the Financial Stability Board, which coordinates G20 financial regulation.
Reichlin said there were “positive signals” from the United States, whose new administration under President Joe Biden has seen a major shift towards action on climate change. U.S. Treasury Secretary Janet Yellen has said she supports setting up the SSB.
The EU, while broadly supportive of IFRS efforts, is pushing ahead with its own set of more comprehensive disclosure rules, saying an SSB could take years to establish itself.
“This concept of a building blocks approach, I am quite confident the EU will support,” Reichlin said.
The IFRS on Friday said it proposed changing its constitution to accommodate the SSB.