IOSCO Recognizes That ESG Matters Have Material Short and Long Term Impact
The International Organization of Securities Commissions (IOSCO), the international body that brings together the world’s securities regulators, published their Statement of Disclosure of ESG Matters by Issuers on 18 January 2019. With the statement, IOSCO recognizes the importance of considering Environmental, Social and Governance (ESG) information as material for investors.
This is a very important move as responsible investment is growing and more coordinated effort from regulators and policy makers is desirable to facilitate the mainstreaming and use of ESG data.
Regulation on tradeable financial assets, known broadly as securities, is country dependent, and the International Organization of Securities Commissions, IOSCO, “develops, implements and promotes adherence to internationally recognized standards for securities regulation.”
Within financial markets, regulation serves to protect investors, ensure fair and efficient markets, and reduce systemic risk. To achieve this, there needs to be “full, accurate, and timely disclosure of financial results, risks, and other information which is material to investors’ decisions”, as stipulated by IOSCO in Principle 16 of the Principles of Securities Regulation. When ESG matters are considered to be material, issuers should disclose the impact or potential impact on their financial performance and value creation.
IOSCO is also running an Emerging Market regulators consult on recommendations related to sustainable finance, open until 1 April 2019. This consultation is a unique opportunity for stakeholders to provide their insights on the role market regulators play in mainstreaming sustainable finance. Recommendation 2 of this consultation looks at ESG-specific disclosures and reporting.
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