LONDON Reuters - A global standard setter for company disclosures should align with European and U.S. alternatives for easier implementation across jurisdictions and to avoid fragmenting information to investors, the European Central Bank and IMF have said.
Over 1,300 responses were attracted by the Frankfurt-based International Sustainability Standards Board ISSB, which proposed global baseline reporting standards. org projects work plan climate-related disclosures exposure-draft and comment-letters view-the comment-letters just published.
The goal is to make reporting more rigorous to make inflated climate-friendly claims harder.
While widely backing the creation of global norms, many call for better definitions of key concepts, longer phase-in, and stress the need for them to be 'interoperable' with standards written by the European Union and the U.S. Securities and Exchange Commission.
One of the world's Big Four accountants who will audit the ISSB disclosures said that the basic term '' is not sufficiently clear.
Without interoperability, it will be harder for jurisdictions to accept disclosures from companies using different norms, meaning costly duplication of reporting.
Interoperability between the ISSB standards and jurisdictional requirements remains one of the biggest challenges that harmonization work faces. The International Monetary Fund said that it is important to avoid further fragmentation.
Multiple standards and approaches being developed at the same time are risk fragmented, according to the London Stock Exchange Group, whose listings will comply with ISSB disclosures.
The LSEG said it has identified several key differences in definitions used by the EU and the ISSB.
EU norms cover enviromental, social and governance disclosures, as well as reporting on a company's impact on the environment, known as double materiality.
The rules of the ISSB focus on climate change's impact on a company.
The ECB said that any international standard should comprise double materiality to meet users' expectations.
It urged the ISSB and other standard setters to iron out differences and come up with baseline standards that are widely implemented in the world.
The EU hopes to finalise its first batch of ESG disclosure rules by November, with the ISSB expected to finalise its own rules by the end of the year.