The Financial Stability Board has called on market and securities authorities to “take early action” to implement climate-related disclosure standards that are expected to be finalised this year.
In an update on its Roadmap for Addressing Financial Risks from Climate Change, which was endorsed by the G20 last year, the FSB said work to strengthen the comparability, consistency and usefulness of climate related financial disclosures had moved forward, and regulators needed to make it a priority to keep up with developments.
The FSB said an important step forward was the release of the International Sustainability Standards Board’s climate-related general sustainability financial reporting standards drafts in March.
Building on the work of the Task Force on Climate Related Financial Disclosure, the ISSB’s aim is to establish a global baseline covering governance, strategy, risk management, metrics and targets.
The International Organisation of Securities Commissions is reviewing the draft standards, with a view to endorsing their use by member market authorities. The ISSB aims to have the standards completed by the end of this year.
“If IOSCO issues an endorsement of the ISSB standards, jurisdictions should take early action to consider the final baseline global reporting standards for use,” the FSB said.
It also noted that the Basel Committee on Banking Supervision will co-ordinate with the ISSB to using Pillar 3 of the Basel Framework to promote a common disclosure baseline for banks’ climate-related risks.
The FSB said audit firms and other service providers needed to be able to provide external assurance of the reliability of disclosures.
In another development, the Network for Greening the Financial System has established a data directory of climate data sources that are mapped to metrics required for specific use cases, such as financial stability monitoring and stress testing.
In addition the International Monetary Fund is leading a G20 project to identify and fill data gaps.
“The availability of high quality, sufficiently granular and comparable data will remain a priority as it is a pre-requisite to monitoring the build-up of climate-related risks in the financial system,” the FSB said.
To assist regulators, the FSB, IOSCO, the Basel Committee and other bodies have launched the Climate Training Alliance to help build capacity and embed climate change into risk management practices.