The world’s official standards body has begun writing sustainable finance rules

ISO calls on market players to join working group after first meeting in China

The International Standards Organisation (ISO) began its work creating a “standard on sustainable finance” in China this month, in a bid to provide global guidelines for investors, banks, insurers, consultants, regulators and governments. 

ISO is the world’s official standards body, affiliated with the World Trade Organisation and the UN’s Economic and Social Council and representing more than 160 national standards bodies. It is behind more than 21,000 global standards so far, and has been increasingly engaged with ESG, making efforts to develop standards for green bond standards and climate finance over the past couple of years.

Organisations will be able to use the standard to “demonstrate alignment”

It has also been suggested it should develop a global green taxonomy, building on the work of Canada and Europe

At its debut meeting, lasting three days between December 2 and 5, a newly-formed ISO working group kicked off attempts to write the Sustainable Finance Framework Standard, which seeks to “provide guidance on principles, practices and terminology at a framework level to support financial and financial services organisations wanting to integrate sustainability principles into their investment and management practices and/or to facilitate the financing and development of new sustainability assets”. 

Organisations will be able to use the standard to “demonstrate alignment” with such principles and practices by reporting on their website or in their annual report, according to a background document about the standard. 

The working group is attached to an ISO Technical Committee known as ‘322 Sustainable Finance’, whose broad aim is to achieve “standardisation in the field of sustainable finance to integrate sustainability considerations including ESG practices In the financing of economic activities”.

The Technical Committee was set up last year by the UK’s national standards body, the British Standards Institute, and has 22 countries participating in its work, including China, the US, Russia, France, Germany, Sweden and Japan. 

Its most recent meeting – only its second – was in Shenzhen at the start of the month, and had backing from a number of Chinese players: the Standards Administration of China, China National Institute of Standardisation, the China Emissions Exchange, China Financial Standardisation Technical Committee and the Green Finance Development and Research Centre of Tsinghua University. 

The standard is currently convened by Hayden Morgan, who leads Green Ratings & Impact Advisory at the Green Investment Group (formerly the UK’s state-owned Green Investment Bank, which is now owned by Macquarie). 

Morgan and the BSI are keen to have more participation from industry experts, and are requesting that anyone interested contact Lesley Wilson

On a national level, in January the BSI is due to release the first report on its UK-focused sustainable finance “framework”, which it is working on with the Government’s Department for Business, Energy and Industrial Strategy (BEIS).

Nicknamed PAS 7340, its full name is the Framework for Embedding the Principles of Sustainable Finance in Financial Services Organisations.