After regulators raised concerns about fragmented capital markets, the European Union sought to reassure international companies on Thursday that it would work to align its sustainability disclosure rules with a global initiative.

To help prevent “greenwashing,” or exaggerated claims about how environmentally friendly a company is in order to attract investors, the EU is putting the finishing touches on mandatory environment, social, and governance (ESG) disclosures for about 50,000 companies throughout the bloc.

While the United States is developing its own disclosure regulations, the International Sustainability Standards Board (ISSB) is developing global baseline standards for corporate disclosures on climate change for use in non-EU nations like Britain.

“I am conscious that Europe is ahead, leading the way and we want to show leadership, but we are also very conscious of the need for global coordination and cooperation,” Mairead McGuinness, the EU’s financial services commissioner, said.

The EU’s disclosures are being developed “on what’s already there, and we will contribute to global standardization initiatives,” McGuinness said at a Central Bank of Ireland conference. Drafts of these disclosures are scheduled to be finished this month.

Companies and regulators have stated that it will be more difficult for investors to compare companies in the absence of a common terminology approach by the EU and ISSB.

“We want to see as much alignment as possible with the work of the International Sustainability Standards Board, even though as I have said Europe is likely to go further and faster to meet our more higher ambitions on climate,” McGuinness said.

By determining the best way to promote sustainable retail lending for small businesses and households, she is advancing the EU’s green plans to the next stage.

“With the support of the European Banking Authority, we are examining what needs to be done to promote the growth of green loans and green mortgages,” McGuinness said.

(Adapted from Reuters.com)

Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability