Source: The Print
Context: Global norms aimed at combating greenwashing are being introduced, pressuring companies to disclose their business’s impact on climate change.
What is Greenwashing?
Greenwashing refers to the deceptive practice of portraying a company, product, or initiative as environmentally friendly or sustainable when it actually lacks substantial environmental benefits or may even be environmentally harmful.
For example, a clothing brand may advertise its products as “eco-friendly” or “green” while still using unsustainable manufacturing processes, contributing to pollution, or exploiting labour.
About the global norms for combating Greenwashing:
International Sustainability Standards Board (ISSB), will set uniform sustainability and climate standards for companies to follow worldwide from 2024.
New standards are:
- IFRS S1: sets out disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face.
- IFRS S2: sets out specific climate-related disclosures and is designed to be used with IFRS S1.
These norms, published by the ISSB with the support of the G20, are intended to assist regulators in cracking down on misleading environmental, social, and governance (ESG) claims.
- These are non-binding and it is up to individual countries to determine whether listed companies must adhere to these standards.
- It builds upon voluntary guidelines from the G20’s Task Force on Climate-related Financial Disclosures (TCFD), which have already been made mandatory for listed companies in Britain.
Financial Stability Board (FSB) created TCFD to improve reporting of climate-related financial information. FSB is an international body (India is a member) that monitors and makes recommendations about the global financial system.
About ISSB
The International Sustainability Standards Board (ISSB) is a standard-setting body established in 2021–2022 under the International Financial Reporting Standards (IFRS) Foundation (a non-profit organisation governing international accounting rules)
The mandate of ISSB: Its mandate is the creation and development of sustainability-related financial reporting standards to meet investors’ needs for sustainability reporting.
