New international guidance for sustainable finance.
Mitigating climate change impacts and reaching carbon-zero goals and the United Nations Sustainable Development Goals requires not only the will, but the money. Lots of it. Sustainable finance, therefore, is a powerful solution and a growing industry, yet it lacks consistency in what it really is and how it is put in place. New international guidance has just been published to create a common language and drive confidence in this essential market.
ISO/TR 32220, Sustainable finance – Basic concepts and key initiatives, provides the first internationally agreed glossary of terms and definitions that the whole world can use to enhance understanding and uptake in the industry. The technical report (TR) features a non-exhaustive list of terminology commonly used in financial markets, intended to guide financial regulators, banks, asset managers, investors, researchers and more.
Bolu Wang, Convenor of the group of experts that developed the guidelines, said the TR will help readers with different backgrounds understand the fundamental building blocks of the sustainable finance system.
“The terms in the glossary represent global consensus on what is currently widely acceptable, providing a valuable tool for collaboration and growth in the industry,” she said.
“In this way, it will help to accelerate convergence of global efforts to deliver sustainable finance. It is just the first of many initiatives we have in this field, as we work with more and more experts to track the evolution of multiple key topics to identify areas for future standards.”
ISO/TR 32220 will soon be joined by the upcoming ISO 32210, Framework for sustainable finance: Principles and guidance. Together, they will consolidate concepts that exist and set out a common terminology, as well as international best practice and guidelines for the industry. This will then provide a platform from which organizations involved in sustainable investment can develop their products further and enable more players to enter the market.
These standards complement the recently published ISO 14097, Greenhouse gas management and related activities – Framework including principles and requirements for assessing and reporting investments and financing activities related to climate change, which helps financiers assess and report on their actions and see the real value of their contribution to climate goals.