Frankfurt has been named as the headquarters of a new global organization responsible for providing companies with standards for reporting sustainability measures – and Montreal will be home to a secondary office.
The locations of the offices for the new International Sustainability Standards Board were announced along with other details of the organization at the COP26 climate summit in Glasgow on Wednesday.
The ISSB’s formation, first announced a year ago, is a response to criticism by investors and companies around the world that sustainability issues, such as climate risks and work force diversity, get reported using multiple frameworks that lack uniformity, creating unneeded complexity. This is in contrast with financial reporting, where standardization of accounting principles has long been enforced.
The secondary hub in Montreal is consolation prize for Canada. Numerous banks, insurers, pension funds, industry associations and major corporations backed a Canadian bid to host the ISSB, even offering a “welcome fund” to support its operations for an initial period.
Frankfurt will house the ISSB board and Montreal will be responsible for “key functions supporting the new board and deeper co-operation with regional stakeholders,” the British-based International Financial Reporting Standards Foundation, which has led the creation of the ISSB, said in a release. Offices in London and San Francisco will provide technical support and regional outreach.
“We want to be global, as sustainability is a very sensitive issue in many areas. You must be present, you must be engaged, you must consult with the people. So we have decided to have a presence in all major jurisdictions,” IFRS trustee chairman Erkki Liikanen said at COP26.
He lauded Montreal’s economic and multicultural strengths, and said that office will be as important to the organization as the headquarters in Frankfurt.
Engaging with developing and emerging economies will be an important priority, the IFRS said. To that end, it is in discussions with Beijing and Tokyo to establish a footprint in Asia.
Frankfurt’s bid had the backing of 185 public and private organizations. The city touted its position as a top financial centre in the European Union and a hub for regulation and financial technology.
Sustainability reporting has quickly risen in importance as more investors weigh ESG-related risks and benefits, and use the data to help direct capital to targets that look prepared to deal with future economic and environmental changes.
The IFRS said the new board will receive technical advice from a consultative committee comprising members from the International Monetary Fund, Organization for Economic Co-operation and Development, United Nations, World Bank as well as from public, private and non-governmental organizations.
In her bid letter to the IFRS last July, Deputy Prime Minister Chrystia Freeland pitched Canada’s commitment to working against climate change through such measures as carbon pricing and investments in clean technology. She said Canada has well-respected accounting, auditing and assurance professions, with deep expertise in law, capital markets and sustainable finance.
On Wednesday, she welcomed the selection of Montreal to host the operational office. “The new ISSB will create good jobs here in Canada and accelerate growth in the green economy, at home and around the world,” Ms. Freeland said in a statement.
Stéphane Paquet, chief executive of Montreal International, the city’s economic promotion agency, said the selection “confirms that Montreal is a sustainable finance hub and that our expertise will help decarbonize the global economy.”
Britain and Switzerland were also in the running to host the headquarters.
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