The International Financial Reporting Standards (IFRS) Foundation trustees signed a Memorandum of Understanding (MoU) with the Ministry of Finance (MoF) of China to establish an IFRS Foundation office in Beijing, as reported by ESG Today on December 30. The office, set to open in mid-2023, will act as a hub for stakeholder engagement in Asia and collaborate with other IFRS Foundation offices around the world. According to the International Sustainability Standards Board (ISSB) Chair, Emmanuel Faber, China’s importance in the global supply chain makes it a key jurisdiction as the ISSB works to develop a global baseline of sustainability disclosures for the capital markets.
The IFRS Foundation set up the ISSB at the COP26 summit in November 2021. ISSB has released two sets of non-compulsory IFRS Sustainability Disclosure Standards, one on climate and the other on sustainability-related financial information disclosures. In April 2022, the US Securities and Exchange Commission (SEC) proposed a climate change disclosure rule that is similar in many respects to the IFRS S2 standard. Additionally, China Securities and Regulatory Commission (CSRC) also unveiled a plan in May 2022 to formulate new reporting standards based on the ISSB standards. CSRC vice chairman, Fang Xinghai, encouraged Chinese companies to voluntarily disclose their environmental, social, and governance (ESG) information before formally adopting the international standards. Fang stated that if the standards are accepted and implemented by most countries, it will have a significant impact on Chinese companies that are already listed overseas or seeking to gain such status.