Risk & Economy » Climate change » IOSCO Chairman: global investors need global comparability on climate regulation

IOSCO Chairman: global investors need global comparability on climate regulation

Market participants call for collaborative approach on climate standards to reduce “creating huge amounts of additional noise in the system”

Resisting fragmentation in climate standards across jurisdictions is “absolutely essential” in ensuring organisations are ”fully engaged” , according to the Ashley Alder, chairman of the International Organisation of Securities Commissions (IOSCO).

Speaking at this year’s City & Financial Global’s City Week event, Alder, who is also CEO of the Securities and Futures Commission in Hong Kong, said regulation should be “sufficiently consistent” as “global investors need global comparability”.

“We can’t simply work in jurisdictional silos when the climate emergency does not respect national boundaries and where emissions in my part of the world account for half of the global total.

“The degree to which we cooperate around a […] sufficient level of consistency, globally around standards, is important,” added Alder. “The worst outcome will be an entirely different approach, creating huge amounts of additional noise in the system. So different frameworks operating in different ways.”

Tim Adams, president and CEO of The Institute of International Finance, described the current climate regulatory space as “a patchwork quilt of approaches”.

“Ultimately, we’ve got to land all these planes at the same place at the same time. That will take years, but we need some strong leadership, cooperation, coordination, […] stronger institutions and a shared vision.”

Moreover, Dr Steve Waygood, chief responsible investment officer at Aviva Investors, said a disconnected approach to climate-related disclosures causes “different information at different points”.

As a result, this causes data to be taken as isolated discrete groups instead of being able to form a coherent overall picture, Waygood added.

Emma Rachmaninov, partner at Freshfields Bruckhaus Deringer, argued that the energy spent within organisations on the differentiation between disclosures across jurisdictions could be better spent.

“What is quite challenging is […] the various different levels, the reporting frameworks, the tweaks you need to make, because it doesn’t quite match the reporting you already do, or how you enforce your clients.

“The energy that gets spent on the very prescriptive implementation, is energy that could be better deployed in putting a framework that’s perhaps more consensus led in the markets, or perhaps internally created to achieve those obligations in a less prescriptive way.”

However, Anthony Belchambers, chairman of the Industry Advisory Group to the APPG on wholesale markets, pointed out global standards are “difficult to achieve because they are always nuanced in interpretation and always flexed by regional rules”.

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