New standards for ESG reporting
The report released by the organization covers 56 pages. IOSCO, the standard-setter for ESG reporting, is requiring companies and organizations to be more transparent about the data and methodology used to prepare and issue ESG reports. Until now, the reports and ratings have been largely unregulated. So far, the same company could receive completely different ratings from various rating organizations. The new objectives set out in the report released yesterday may help unify the rules and introduce a consistent methodology.
What can we expect?
Will the report translate into real changes? It is hard to determine at this point, but what is certain is that the market for institutions and companies involved in ESG ratings is skyrocketing. In some countries, investments in this area increase annually even by 20%.
One of the outcomes of COP26, just finished in Glasgow, is the establishment of the International Sustainability Standards Board (ISSB). The board should provide guidance on carbon footprint disclosure for companies and organizations. The establishment of the board is intended to increase transparency and access to data related to the carbon footprint of companies and institutions. This is an important step towards carbon neutrality, which we have to reach as soon as possible if we want to avoid the catastrophic effects of climate change.
We need transparent data and methodology
Our goal should be a future in which data related to climate and carbon footprint is widely accessible and transparent. Rating companies should have limited discretion in interpreting them: unfortunately it’s not the case today. Change will not happen overnight, but both the IOSCO report and the appointment of the new board are steps taken in the right direction.
Full text of the report here: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD690.pdf