The background to the Financial Stability Board’s latest climate change initiative is full of potentially profound implications for the global financial system.

Hong Kong is the latest entrant into the voluntary carbon market with a remit to channel much-needed overseas funds into mainland China. Its new regulatory regime needs to overcome a crippling lack of trust in offsets despite their vast growth prospects. 

Interoperability between standards is key if the much-vaunted International Sustainability Standards Board is to prove effective in setting a new regulatory global baseline on disclosures. The new Impact Management Platform may help bridge the gap across jurisdictions.

The credibility of the EU’s landmark green taxonomy has taken a blow after the decision to categorise nuclear and natural gas as “green”. Yet the need for it – and taxonomies like it – is stronger than ever.

The European Commission believes that its new European single access point to standardise data will remove a big barrier to effective use of ESG information. But how far it can achieve this on its own remains in question. 

Regulators are having to respond fast to avert a wide scale greenwashing scandal on the back of the explosive growth in ESG investments.  

Calls are being made for a dedicated regulator to oversee the EU’s Emissions Trading Scheme amid warnings that dramatic speculative surges in the carbon price threaten support for the entire scheme. 

The plethora of opaque and often confusing ESG ratings methodologies could endanger the transition to a sustainable economy prompting IOSCO to wade in with suggestions on how to improve consistency. 

The creation of an International Sustainability Standards Board promises to replace a patchwork of ESG company disclosures standards with a single set of global rules, but will prove challenging to implement. 

As the prominence of the social dimension of ESG surges, regulators feel the necessity to intervene more forcefully to replace voluntary reporting with tougher standards.