The IOSCO Growth and Emerging Market Committee provided recommendations to market participants and member jurisdictions on regulations and guidance concerning sustainable finance in emerging markets and Environmental, Social and Governance ("ESG") specific risks.
As outlined in the final report, IOSCO advised:
-
issuers to address ESG issues in their overall risk assessment and governance;
-
institutional investors to incorporate ESG-specific issues into their strategies, analyses and recommendations, and consider any material ESG disclosures of the entities they invest in;
-
market participants raising funds through sustainable instruments to use those funds for ESG projects and activities; and
-
issuers to consider using external auditing to ensure they are properly using funds raised through sustainable instruments.
IOSCO also urged regulators to:
-
clearly define "sustainable instruments";
-
require material ESG-specific risks in disclosures;
-
establish offering document requirements for sustainable instruments;
-
impose ongoing disclosure requirements on funds raised through sustainable instruments;
-
propose regulations to prevent, identify and sanction any misuse of funds raised through sustainable instruments;
-
examine any gaps in capacity and expertise concerning ESG-related issues and consider targeted capacity building to address any failings; and
-
encourage market participants to adopt IOSCO's recommendations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
