الهيئة العامة للرقابة المالية

Dr. Mohamed Farid, FRA  Chairman and Vice Chair of the IOSCO Board:

• The partnership between the GEMC and the ISSB to enhance sustainability reporting is a significant step forward. Sustainability should extend beyond listed companies and financial institutions to all companies
• Adopting ISSB standards is crucial for developing emerging markets, enhancing their competitiveness and attracting investments
• Eight GEMC members have already completed the extensive preparations necessary to adopt ISSB standards

Dr. Mohamed Farid, FRA Chairman and Chair of the GEMC, participated in the press conference announcing the launch of a strategic partnership between the GEMC and the ISSB. The announcement was made on the sidelines of the GEMC annual meeting and public conference held in Turkey.

Dr. Mohamed Farid, Vice Chair of IOSCO and Chair of the GEMC, the largest committee within IOSCO, representing over 75% of its members. The GEMC comprises 90 members and 24 associate members, including many of the world’s fastest-growing economies and 10 G20 members.

Dr. Farid emphasized that the partnership between the GEMC and the ISSB aims to revolutionize sustainability reporting in capital markets. Since IOSCO endorsed the ISSB sustainability standards last year, the GEMC has been driving dialogue among its 117 members to address their readiness, plans, and challenges in adopting and implementing these standards.

To support its members, IOSCO is developing tools and resources, including capacity-building initiatives in partnership with strategic partners. As the world’s leading organization for setting financial market standards, IOSCO plays a crucial role in ensuring fair, transparent, and efficient markets worldwide. With a membership comprising nearly 95% of the world’s securities regulators.

Dr. Farid added that the GEMC’s initiative to adopt ISSB standards is a crucial and practical step to enhance capacity building in emerging markets. Following collaboration among GEMC members to better understand the challenges they face, a survey was conducted among approximately half of the committee’s members. The survey revealed that emerging market countries are at different stages of adopting these standards.

The survey showed that 16 countries are at the beginning of their journey to adopt the standards, meaning they are either aware of the ISSB standards or are working to build awareness and understanding of the value proposition of ISSB standards. These countries include Angola, Argentina, Bahamas, Bahrain, Bangladesh, Brunei, Cape Verde, Georgia, Lithuania, Mauritius, Nepal, Panama, Serbia, Slovenia, Tunisia, and Uruguay.

He mentioned that eight other members are in the stage of assessing the status of adopting ISSB standards and considering market readiness. These include Abu Dhabi, Belize, Indonesia, Jordan, Korea, Oman, South Africa (FSCA, PA).

FRA Chairman indicated that 10 emerging markets have made significant progress in this area, as they are already developing a roadmap or plan to adopt ISSB standards that defines the key features of the proposed system. These countries are Kenya, Kuwait, Mexico, Morocco, Qatar (FCRA), Qatar (FMA), Saudi Arabia, Thailand, Zambia, and Zimbabwe.

He confirmed that eight emerging markets have completed a long journey in implementing their ISSB standards adoption plans, as they have begun enacting measures to reflect the impact of ISSB standards over time within their legal and regulatory frameworks. These countries include Brazil, Chile, China, Egypt, India, Malaysia, Sri Lanka, and Turkey.

Also, Dr. Farid pointed out that sustainability practices should not be limited to publicly listed companies but should extend to all companies. This is crucial for enhancing competitiveness and transparency, enabling these companies to attract and mobilize foreign investments while fulfilling their societal and environmental responsibilities. He explained that one of the biggest challenges is how to apply these standards to non-listed companies and ensure their compliance with disclosure requirements. This is particularly challenging due to the decreasing number of listings and the differences in regulatory frameworks governing listed and non-listed companies, despite their environmental impact.

Dr. Farid stated that given the diversity in the current journey, all emerging markets, regardless of the stage they are in, are welcome to join the network. He explained that despite the different stages emerging markets are going through, there are shared capacity-building needs across all markets, including, for example, supervision and implementation, as well as completing the implementation of the more in-depth and challenging aspects of IFRS S1 and IFRS S2, and then assessing market readiness.

He explained that the proposed network aims to provide a platform for emerging markets to exchange experiences and build capacity throughout their journey towards adopting ISSB standards. This is also important given that there are some common drivers and motivations among emerging markets behind adopting ISSB standards, the three most common drivers being regulatory convergence and interoperability considerations, the importance of sustainability considerations, as Jean Paul mentioned earlier, as well as access to capital.

It is worth noting that the International Sustainability Standards Board (ISSB) has developed the ISSB standards to be a comprehensive and high-quality global reference for sustainability-related disclosures. These standards prioritize the needs of investors and financial markets, aiming to develop global baseline standards for sustainability disclosures. By doing so, the ISSB seeks to meet investors’ information needs and enable companies to provide comprehensive sustainability information to global capital markets.

On the other hand, Jean-Paul, Chair of the IOSCO Board, emphasized that sustainable finance is a top priority. IOSCO is committed to achieve full, consistent and comparable corporate sustainability disclosures to combat greenwashing and enhance transparency.

He added that following extensive engagement with the ISSB, IOSCO endorsed the ISSB standards in July 2023. Recognizing the unique challenges faced by emerging markets, IOSCO has developed a comprehensive capacity-building program to support their adoption of these standards.

Also, he underscored the necessity of providing additional support to emerging markets. This is essential given the significant role of regulatory authorities in these markets to drive sustainability progress, the need to align with international standards to attract foreign investment, and the challenges faced by domestic market participants in meeting regulatory demands. To address these issues, the IOSCO has introduced a comprehensive capacity-building program targeting securities regulators, preparing them for the future implementation of ISSB standards.

Emmanuel Faber, Chair of the ISSB, expressed gratitude for IOSCO’s early endorsement and its commitment to promote global capital market efficiency and transparency. He emphasized the importance of high-quality international standards in enhancing market integrity, bolstering investor confidence and attracting foreign investment. He pointed out that the IOSCO is unique among international standard-setters, as is the GEMC, and therefore the ISSB commends IOSCO for leading this initiative to support its members’ efforts to adopt ISSB standards.