The decision of the European Union to formulate new regulations that would require companies to show investors how climate change will affect their activities was defended by it on Wednesday as the EU said that it would be years for a global approach on this matter to mature.
Absolutely ground breaking proposals for sustainability disclosures by companies with the 27 member economic bloc were unveiled by the EU on Wednesday along with a system of classifying for defining what can be labelled a “green” asset or activity in a sustainability disclosure by a company.
This puts the EU well ahead of such similar efforts around the world aimed at creating an international sustainability standards board to frame such green disclosure rules. It is expected that the details of such a standard will be published prior to the UN COP26 global climate change conference scheduled to be held in November.
In order to be able to make comparisons between companies easier and to avoid ‘greenwashing’ or firms over emphasizing their green credentials, investors have been calling for creation of global standards on sustainability reporting to replace a patchwork of norms that are now emerging.
The concept of the proposed new sustainability standards board has also been supported by global financial regulators. However that did not deter the EU from placing its own regulations for sustainability reporting.
“We are a global frontrunner,” the EU’s financial services chief Mairead McGuinness told an online event held by financial industry body IIF. “At the moment we have a confused situation, an array of different standards companies can use,” she said.
This initiative by the EU was welcomed by the Managing Director of the International Monetary Fund Kristalina Georgieva. “It will be critical for the world to converge on common principles, disclosures, and standards for more reliable sustainability information,” she said in a tweet.
It is important that international rules on sustainability reporting be created so that the global financial institutions could create a mobile pool of capital which can be tapped for making investments in projects that are climate friendly anywhere in the world, said Axel Weber, chairman of UBS bank.
“It’s good we are seeing a European approach as opposed to a fragmented approach we have seen in Europe many times in the past, but we need a global approach,” Weber said.
Weber said that the new regulations on company disclosure as unveiled by the EU could be taken into account by foreign regulators when framing their own regulations. However it was not clear about the degree of openness of the EU to approaches from other policy makers, he added.
While the EU was open to working with global initiatives in this regards, McGuinness also cautioned that similar efforts, such as creating international accounting rules, was not possible to be completed successfully overnight.
“There isn’t any conflict here, we are all working in one direction,” McGuinness said. “It will be bumpy… we don’t have time to waste.”
(Source:www.financialpost.com)
Absolutely ground breaking proposals for sustainability disclosures by companies with the 27 member economic bloc were unveiled by the EU on Wednesday along with a system of classifying for defining what can be labelled a “green” asset or activity in a sustainability disclosure by a company.
This puts the EU well ahead of such similar efforts around the world aimed at creating an international sustainability standards board to frame such green disclosure rules. It is expected that the details of such a standard will be published prior to the UN COP26 global climate change conference scheduled to be held in November.
In order to be able to make comparisons between companies easier and to avoid ‘greenwashing’ or firms over emphasizing their green credentials, investors have been calling for creation of global standards on sustainability reporting to replace a patchwork of norms that are now emerging.
The concept of the proposed new sustainability standards board has also been supported by global financial regulators. However that did not deter the EU from placing its own regulations for sustainability reporting.
“We are a global frontrunner,” the EU’s financial services chief Mairead McGuinness told an online event held by financial industry body IIF. “At the moment we have a confused situation, an array of different standards companies can use,” she said.
This initiative by the EU was welcomed by the Managing Director of the International Monetary Fund Kristalina Georgieva. “It will be critical for the world to converge on common principles, disclosures, and standards for more reliable sustainability information,” she said in a tweet.
It is important that international rules on sustainability reporting be created so that the global financial institutions could create a mobile pool of capital which can be tapped for making investments in projects that are climate friendly anywhere in the world, said Axel Weber, chairman of UBS bank.
“It’s good we are seeing a European approach as opposed to a fragmented approach we have seen in Europe many times in the past, but we need a global approach,” Weber said.
Weber said that the new regulations on company disclosure as unveiled by the EU could be taken into account by foreign regulators when framing their own regulations. However it was not clear about the degree of openness of the EU to approaches from other policy makers, he added.
While the EU was open to working with global initiatives in this regards, McGuinness also cautioned that similar efforts, such as creating international accounting rules, was not possible to be completed successfully overnight.
“There isn’t any conflict here, we are all working in one direction,” McGuinness said. “It will be bumpy… we don’t have time to waste.”
(Source:www.financialpost.com)
