UK’s audit watchdog says it ‘strongly supports’ global ESG reporting standards

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Rishi Sunak has been urged to stop delaying reforms to the auditing system in a bid to see measures included in next week’s King’s Speech.
Rishi Sunak has been urged to stop delaying reforms to the auditing system in a bid to see measures included in next week’s King’s Speech.

The UK’s audit watchdog has said it “strongly supports” the development of high-quality, global standards for reporting on climate and sustainability data.

The UK’s Financial Reporting Council (FRC) said it backs plans put forward by the International Sustainability Standard Board’s (ISSB’s) for new worldwide ESG reporting rules.

The comments come after the International Financial Reporting Standards (IFRS) Foundation launched the ISSB at the UN’s COP26 climate summit in Glasgow last year, with a mandate to develop globally recognized sustainability standards.

In response to a consultation on the ISSB’s plans, the FRC said: “We recognise that climate and wider sustainability and ESG data is increasingly being used for capital allocation decisions, and therefore, needs to be as reliable and comparable as financial reporting.”

The FRC said there is a “clear and urgent need” for global sustainability standards, as it said the ISSB should ensure the standards created are “globally accepted” and “drive high-quality reporting”.

The consultation comes as regulators from across the globe, including Germany’s BaFin and the US Securities and Exchanges Commission (SEC), launched raids on firms suspected of greenwashing, as British lawyers also said they expected British regulators to crackdown on false ESG claims.