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Crafting useful, widely accepted corporate reporting standards for greenhouse gas emissions and other sustainability-related disclosures is still a work in progress, but policy-makers are already working on developing standards for auditing that reporting.

With growing demand from investors and regulators for improved sustainability reporting, the International Organization of Securities Commissions (IOSCO) is calling on global standard setters in the auditing business to develop their own oversight standards to ensure reporting is reliable and accurate.

In a release, the umbrella group of global securities regulators said they welcomed the work of the international audit and assurance standard setters — specifically, the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants — to develop oversight standards for sustainability reporting.

Earlier this year, IOSCO held a roundtable with investors, issuers and others that found growing investor demand for “assurance to enhance the reliability of corporate sustainability reporting.”

“While limited assurance may be the most realistic objective in the short term, investors typically see reasonable assurance as the long-term target, especially in respect of metrics such as those related to greenhouse gas emissions,” the group noted.

At the same time, IOSCO said one of its criteria for deciding whether to endorse the corporate reporting standards being developed by the new International Sustainability Standards Board (ISSB) will be whether its proposals can support robust oversight of that reporting.

“The process for IOSCO’s potential endorsement of the ISSB’s standards will begin after the ISSB has issued its final standards,” it said.

In the meantime, IOSCO said it’s planning a second roundtable in the months ahead to further discuss and gather feedback on issues surrounding the auditing of sustainability reporting. Based on this and other work, IOSCO plans to issue a public report in early 2023 setting out its plans in this emerging area.

The group also noted that the entire framework for sustainability reporting is evolving.

“Stakeholders will need to adapt to new sustainability-related reporting standards and to enhanced expectations among increasingly sophisticated users of sustainability-related information across financial markets,” it said.