The IFRS Foundation Trustees announced plans to open an office for its International Sustainability Standards Board (ISSB) in Beijing, following signing an agreement with China’s Ministry of Finance on Thursday.
Launched last year at the COP26 climate conference, the ISSB is currently in the process of developing its first 2 proposed standards for company sustainability and climate related disclosures around the end of this year, and to issue the final standards as early as possible in 2023. Regulators in major jurisdictions around the world including Europe, the UK and the U.S., among others, have introduced or are preparing mandatory sustainability reporting requirements for companies, and most will be heavily influenced by the ISSB standards.
China has not yet implemented a system of mandatory sustainability reporting requirements for companies, but the China Enterprise Reform and Development Society (CERDS) released the country’s first standards for voluntary ESG disclosure in June, and the China Securities Regulatory Commission (CSRC) signaled support earlier this year for adoption of the ISSB standards to improve international compatibility of disclosures and enable investment by global investors.
Adoption of the ISSB standards by China would have significant implications for the ability of companies globally to provide ESG data based on consistent rules and guidelines, with the standards extending reporting requirements into company supply chains, such as reporting on Scope 3 greenhouse gas emissions.
Emmanuel Faber, ISSB Chair, said:
“China is the world’s second largest economy and plays a vital role in supply chains for companies around the world—making it an important jurisdiction as the ISSB develops its global baseline of sustainability disclosures for the capital markets. The Beijing office will play a vital role in this endeavour.”
According to the IFRS Foundation, the Beijing office is expected to open in 2023, with staff focusing on carrying out the ISSB’s strategy for emerging and developing economies, and to act as a hub for stakeholder engagement in Asia.
Erkki Liikanen, Chair of the IFRS Foundation Trustees, said:
“When we announced the ISSB at COP26, we confirmed the new board would have a global presence through a multi-location model. The announcement of the Beijing office is an important step towards the establishment of our global footprint in the ISSB’s inaugural year.”
Zhongming Zhu, Vice Minister of Finance China, added:
“The signing of the MOU for the Beijing office marks a milestone in the deepening of cooperation between MoF China and the Foundation. We hope that it will serve as the beginning of a new journey that will witness closer cooperation between the two sides towards development and promotion of ISSB’s high-quality international sustainability disclosure standards.”