IOSCO Launches Network to Facilitate Adoption of ISSB Sustainability Reporting Standards in Emerging Markets

IOSCO has launched the GEMC Network to assist emerging markets in adopting the ISSB's sustainability reporting standards. This initiative follows the release of the IFRS Foundation's key sustainability (IFRS S1) and climate (IFRS S2) standards in 2023. The network aims to build local capacity, share information regionally, and help businesses in these markets align with global sustainability reporting requirements. With more jurisdictions expressing interest, this network is set to play a key role in standardizing sustainability disclosures worldwide.

The International Organization of Securities Commissions (IOSCO), the foremost global body for securities regulators, has unveiled the GEMC Network for Adoption or Other Use of ISSB Standards. This initiative is designed to accelerate the adoption and application of the IFRS Foundation’s sustainability reporting standards in emerging markets.

The launch comes in the wake of the IFRS Foundation’s International Sustainability Standards Board (ISSB) introducing its first set of global sustainability reporting standards – IFRS S1 on general sustainability and IFRS S2 on climate – in June 2023. These standards are intended to provide standardized, globally consistent information on sustainability risks and opportunities for investors.

Key Developments:

  • Supporting Adoption: The new network will focus on assisting emerging markets in adopting the ISSB standards. IOSCO’s initiative will aid in building local capabilities and offer a platform for sharing knowledge at the regional level;
  • Growing Global Support: Following the release of the ISSB standards, IOSCO encouraged regulators to integrate these standards into their sustainability reporting frameworks. To date, 30 jurisdictions, representing almost 60% of global GDP, have either adopted or are in the process of adopting these standards;
  • Expanding Membership: The network, at launch, includes members from IOSCO’s Growth and Emerging Markets Committee (GEMC), covering 31 jurisdictions such as China, Brazil, and Mexico. Collectively, these members account for over 90% of BRICS economies' GDP, nearly half of the GDP of Africa and the Middle East, and over two-thirds of Latin America and the Caribbean’s GDP;
  • Ongoing Interest: More jurisdictions are expected to join, as interest in adopting the ISSB standards continues to grow.

Implications for Businesses

Companies in emerging markets can expect a significant shift in how sustainability reporting is approached. As the ISSB standards are integrated into regulatory frameworks, businesses will be required to align their sustainability reports with these new guidelines.

This transition will require developing local expertise and ensuring that companies have the resources needed to implement the standards effectively. Furthermore, the network will provide valuable opportunities for companies to share insights and best practices, fostering a collaborative approach to sustainability reporting.

Takeaways

The launch of the GEMC Network represents a significant milestone in the global adoption of sustainability reporting standards. With a growing number of jurisdictions expressing interest, businesses in emerging markets will be increasingly expected to meet internationally recognized sustainability reporting standards. This initiative will provide them with both the support and the framework needed to make this transition successfully, ensuring greater transparency and consistency in their sustainability disclosures.