The finance ministers and central bank governors of the G7 countries are endorsing the work of the International Sustainability Standards Board (ISSB) to develop a “global baseline” for disclosure of the impacts of climate change, and other sustainability issues, in the capital markets.
In a communique, the G7 praised the ISSB’s progress towards minimum standards, and its statement on May 18 outlining the steps that it sees as necessary to reach those standards. The ISSB published its first set of proposed standards in March, which are open to consultation until July 29, and the group indicated that it is on track to finalize a disclosure baseline for the capital markets by the end of the year.
“The global baseline approach will play a vital role in building the trust and transparency needed to foster economic stability and contribute to the transformation of sustainable economic, social and environmental systems and a just transition for a better future,” the ISSB said in its latest statement.
Once finalized, implementing the global baseline standards will require action by regulators, market participants, and others, the ISSB added.
Already, the ISSB said that it’s establishing working groups to connect with jurisdictions that are already working on climate-related disclosure standards (such as Canada and the U.S.); and that it plans to “intensify its engagement” with policymakers and market participants.
“This engagement includes working with [the International Organization of Securities Commissions (IOSCO)] as it evaluates whether to endorse standards issued by the ISSB for use by its members, and with organizations responsible for considering the assurance of sustainability-related financial disclosures,” it said.
Today, the G7 called on “all relevant stakeholders to participate in the ongoing consultation on the proposed standards”; and it asked the ISSB to work with other standards setters to ensure that its disclosure standards can be implemented globally.
“The baseline should be practical, flexible and proportionate and ultimately suitable for small- and medium-size enterprises and enable jurisdictions to implement the baseline,” it said.
The G7 also called on national governments and policymakers to prepare to adopt the global baseline standards, “in order to minimize fragmentation of reporting requirements, reduce reporting burdens, and enable the availability of consistent sustainability information for users.”
And, it asked the ISSB to continue to work to go beyond climate reporting standards to address nature and social issues too.
“We are encouraged by the G7’s endorsement of our work to deliver a global baseline of sustainability disclosures for the capital markets,” said Emmanuel Faber, chair of the ISSB, in a statement.
“We reaffirm our commitment to work in close cooperation with jurisdictions and market participants, both on development and adoption of the global baseline and its interoperability with broader jurisdictional requirements,” he added.