IOSCO reports on supervisory action against greenwashing

Posted on December 24, 2023 by Editor

Action on greenwashing has been accelerating around the world to safeguard investors and market integrity in the sustainable finance realm. The International Organisation of Securities Commissions (IOSCO) recently published a paper shining a light on various initiatives in the burgeoning sustainability space.

IOSCO has identified a number of critical challenges, including data gaps, transparency issues, and varied regulatory approaches across jurisdictions – in an area that benefits greatly from cross-border comparability.

Despite ongoing efforts by various jurisdictions to confront these challenges, greenwashing persists as a formidable market concern. It poses inherent risks to both investor protection and the overall integrity of financial markets. IOSCO underscores the need to cultivate cultures that champion best practices in sustainable finance.

The report emphasises the critical requirement for reliable, consistent, and comparable sustainability information. IOSCO calls for a concerted effort to ensure that these products are marketed and managed in ways that enhance rather than undermine investor trust.

To bolster global trust in sustainable finance, IOSCO recently endorsed the International Sustainability Standards Board’s (ISSB) standards, IFRS S1 and IFRS S2, emphasising their suitability as a global framework for transparent, effective reporting of ESG data.

Key highlights of the report include insights into supervisory mechanisms, educational initiatives, and enforcement measures implemented by different jurisdictions. Greenwashing is acknowledged as a pervasive risk throughout the investment value chain, involving various market participants, from issuers to asset managers as well as ratings and data product providers.

Read the report here.

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