IFRS, IFC Launch Partnership to Improve Sustainability Reporting Emerging Markets

The IFRS Foundation and the World Bank Group’s International Finance Corporation (IFC) announced the establishment of a new strategic partnership aimed at improving sustainability reporting in emerging markets and developing economies (EMDEs), in order to strengthen sustainable capital markets through improved standardization and transparency.

The new alliance comes as developing economies will need to significantly scale up climate investments and finance over the next few years, with the IFC estimating a need in emerging markets for nearly $3 trillion per year by 2030 to adapt to climate change, with the bulk of funding required to come from private sources.

The IFRS Foundation launched its International Sustainability Standards Board (ISSB) in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards to provide investors with information about companies’ sustainability risks and opportunities. The IFRS released its inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023.

IFRS and IFC made the announcement during London’s Climate Action Week. The news comes the same week ISSB finalized its work plan for 2024-26, which centers around further streamlining climate disclosures.

Following the release of the standards last year, IOSCO, the leading international policy forum and standards setter for securities regulators called on regulators to incorporate the standards into their sustainability reporting regulatory frameworks. The IFRS Foundation reported in May 2024 that to date, more than 20 jurisdictions representing nearly 55% of global GDP have decided to use the ISSB standards, or are taking steps to introduce the standards in their own frameworks.

The partnership with the global investment and advisory firm will look to build on IFC’s prior Sustainable Banking and Finance Network and Beyond the Balance Sheet initiatives, the organizations said. SBFN is a platform for sustainable finance and financial regulators and industry groups from emerging economies. IFC provides emerging and developing economies with advisory services on climate and sustainability reporting through its Beyond the Balance Sheet initiative. IFC said in the release that those advisory services have been pushing for alignment with the European Union’s Corporate Sustainability Reporting Directive and the ISSB’s standards, which are interoperable. 

Under the new partnership, the IFRS Foundation and IFC will focus on implementing programmes to promote and build capacity for the consistent application of the IFRS Sustainability Disclosure Standards across EMDEs, through initiatives including the development of toolkits and research publications and by conducting training programmes to encourage sustainability reporting. The partnership also plans to provide technical assistance and tailored support to help jurisdictions adopt and implement the standards effectively.

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