The International Finance Corporation (IFC), the private lending arm of the World Bank Group, and the IFRS Foundation, the key standard setter for the global accounting sector, have signed a memorandum of understanding, agreeing on a partnership to strengthen sustainable capital markets by improving sustainability and climate reporting in emerging markets and developing economies (EMDEs).
The IFRS Foundation’s International Sustainability Standards Board (ISSB) issued two inaugural standards in June 2023 with the objective of delivering global consistency and comparability of sustainability-related financial disclosures for capital markets. Jurisdictions making up around 55% of global gross domestic product, the organizations say, are already taking steps towards using these standards.
The partnership, announced during London’s Climate Action Week, will focus on implementing programmes to promote and build capacity for the consistent application of the IFRS Sustainability Disclosure Standards across EMDEs. This includes developing toolkits and research publications as well as conducting training programmes to encourage sustainability reporting.
The partnership also outlines plans to provide technical assistance and tailored support to help jurisdictions adopt and implement these standards effectively, building on IFC’s successful initiatives already in Bangladesh and Jordan.
This collaboration builds on the IFC's extensive efforts through initiatives such as the Beyond the Balance Sheet programme and the Sustainable Banking and Finance Network (SBFN). The Beyond the Balance Sheet programme has been pivotal in providing advisory services to improve sustainability and climate-related reporting in EMDEs, aligning with the new IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards.
The Sustainable Banking and Finance Network, facilitated by IFC as its secretariat, is a global knowledge-sharing and capacity-building platform on sustainable finance for financial sector regulators and industry associations in EMDEs.
This partnership, the parties say, is a commitment to future-proof financial markets against environmental risks, support the private sector’s ability to seize opportunities to evolve towards more resilient business models, and to promote the transparency that global investors and stakeholders increasingly demand.
“This partnership will expand our impact, helping enhance the quality of sustainability and climate-related financial reporting worldwide, especially in EMDEs,” states Jingdong Hua, ISSB’s vice-chair. “It plays a critical role in bringing structured and reliable sustainability information to the forefront of global markets, facilitating investments.”