LONDON- A new global standard setter for company sustainability reporting needs to ensure its definition of “sustainability” fits with other initiatives to stamp out “greenwashing”, the European Union’s securities watchdog said on Wednesday.
The new standard setter – the International Sustainability Standards Board or ISSB – was launched in November 2021 to combat greenwashing, or exaggerating green credentials.
The ISSB has proposed a set of global “baseline” company disclosure rules, which largely focus on the impact of climate change on companies.
But the ISSB is only one of several initiatives designed to stop greenwashing, or companies flattering their sustainability credentials as trillions of dollars flow into investments marketed as “green.”
The EU has already agreed on its own rules for companies to disclose the impact of environment, social and governance (ESG) issues on their business, and their own impact on the environment. The United States has also proposed its own disclosure rules.
Faced with three sets of norms, business has called for a common terminology to avoid confusion.
The EU’s European Securities and Markets Authority (ESMA) said the ISSB proposals do not clearly define what sustainability-related matters are being addressed.
“ESMA would recommend selecting a converged scope and definition of what is meant by ‘sustainability’ with other major standard-setting initiatives,” ESMA Chair Verena Ross said in a letter to the ISSB published on Wednesday. – Reuters
