IFRS builds global reach with office in China
January 11, 2022
The IFRS Foundation Trustees is expanding its global presence by establishing an office in China.
On 29 December an agreement was signed with China’s Ministry of Finance (MOF) to open an office for the International Sustainability Standards Board (ISSB) in Beijing.
The signing follows the COP26 announcement of the ISSB and its plans to develop a global and multi-location presence.
This is also a mark of progress towards improving China’s level of transparency, with investors historically finding the opaque nature of the communist country a challenge.
The office is expected to open in mid-2023 and will act as a hub for stakeholder engagement in Asia.
Staff based at the office will be focused on executing the ISSB’s strategy for emerging economies, developing countries, and SMEs.
Erkii Liikanen, chair of IFRS Foundation Trustees, said: “The announcement of the Beijing office is an important step towards the establishment of our global footprint in the ISSB’s inaugural year.”
The ISSB’s presence in China is significant as investor demand has driven an acceleration of ESG awareness and reporting in the country.
This acceleration of ESG reporting was demonstrated as the number of CSI 300 companies which released official ESG disclosures increased significantly from 54% in 2013 to 86% in mid-2020.
However, among the companies that had disclosed only 12% had audited reports, which suggests improvements for the quality of disclosures is required.
Even though more companies are issuing ESG reports, China has not yet implemented a system of mandatory sustainability reporting requirements.
The lack of unified ESG disclosure standards has reduced the quality of ESG reports as information is often incomplete or not credible.
However, the China Securities Regulatory Commission has indicated support for the adoption of the ISSB standards to improve international compatibility of disclosures.
The MOF also signalled support by encouraging Chinese companies to participate in the development of IFRS sustainability disclosure standards on 31 March 2022.
Emmanuel Faber, ISSB chair, said: “China is the world’s second largest economy and plays a vital role in supply chains for companies around the world—making it an important jurisdiction as the ISSB develops its global baseline of sustainability disclosures for the capital markets. “
Last Updated: 12 January 2023