G20 companies will face common disclosure requirements on climate change risks under plans by the Financial Stability Board, which coordinates financial rules for the group.
In the latest sign of how policymakers want faster action to replace the patchy progress seen so far, the FSB said on Tuesday that said it will set out in July ways to promote consistent, high-quality climate disclosures.
Investors have long called for globally comparable disclosures to stop so-called greenwashing, where firms exaggerate their responses to climate change or underplay how global warming is likely to affect their business.
Although recommendations by the FSB’s Task Force for Climate-related Financial Disclosures (TCFD) are being applied by some companies, they are voluntary and critics say they lack detail, while implementation has been patchy.
While the 27-member European Union is pushing ahead with reforms to define which investments are “sustainable” and how to disclose them, the FSB said it would build on the TCFD recommendations.
The FSB, whose members include central banks, financial regulators and treasury officials from G20 countries, said it backed plans by the IFRS Foundation for a global sustainability reporting standards board based on the TCFD recommendations initially.
Given a proliferation of work on climate disclosures, the FSB said there was a need for a “strategic vision, good coordination, and clear communication to the G20 and the public” and it will present a multi-year roadmap this summer.
“This will leverage work being carried out by standard setting bodies and international organizations while simultaneously using our mechanisms to identify vulnerabilities and build consensus on ways forward,” it said.
The FSB and the Network for Greening the Financial System, a forum of central banks and financial regulators for climate related issues, will also work with each other.