Findings from the Global Financial Regulators Summit, 2023

[Music] I hope you can hear me well I mean we are facing two challenges here well we speak after Jean Paul my good friend Jean Paul and he said it all so what could we add as a challenge and then M say it's lunchtime so uh I see people uh living but uh I think we have to add a few things and I'm I'm I'm happy to talk about this uh Summit that was held yesterday uh and the closed door uh this is the Sea of the race you know collaboration and Regulators are used to talk work exchange uh together and it's what we have been doing yesterday during three hours with The Regulators from from the US from the EU from the Mina region also Asia and I think it was really productive um so today we're going to uh come back to you with some public uh main takeaway what would you talk about no basically uh we had two issues uh to address well to talk about is uh obviously green washing that the first hot issue and then uh transition planning what to do about the the transition but we want to be a bit more specific so I'm glad to be uh to have four panelists with expertise and uh I think that we we we'll start with you uh Jonathan I think uh on the green washing issue uh we keep saying that disclosure is the tool to what extent could we uh say that this is the right tool what can it may help mitigate even fighting green washing I think it would be good to to hear from you with your IFRS and Global Perspective thank you very much Philip uh and uh again thank you for the organizers for allowing me to share the ier foundation perspectives and I think Jean Paul has already uh Advanced a lot you know disclosures it's really the backbone of uh you know financial markets it's actually what allows uh you know to connect those that are willing to raise Capital with those that are willing to invest but they want to have a proper understanding of the risks and be able to praise them uh appropriately and I think J Paul was referring to what are the risks of misleading information green washing that can actually hinder investor trust and can limit the ability of markets to you know uh um produce Financial flows and I think he was talking about risks to Integrity investor protection but I would go beyond because actually if there are concentration of those risks say in financial institutions there could be uh systemic risks or financial stability risks um as well so disclosures enables you know disclosures in a way that's regulated verified information uh information that is material allows um investors to have trust and confidence in those in those disclosures but this requires a regime where disclosures do address their information needs um and that is what the IFRS Foundation through the international sustainability Standards Board is trying to do we have designed our standards to provide that information that's material to investors our standards have been designed and this is why we have been working very closely with JN Paul and I members to be incorporated into regulatory Frameworks these standards very much U you know are put at the same level of Accounting Standards so it's the entire process through the financial reporting chain csos coming closer to CFOs boards discussing um um man risk management strategies uh audit committees looking into that and of course Assurance verification and supervision coming on top of that and I think it's it's U um um it's really key in interconnected markets that that information is comparable and consistent at Global level we have been already seeing a lot of sustainability information coming through the markets but that has been through I think John Paul was referring to the alphabet so that Myriad of different standards many of which have been applied on a voluntary basis without appropriate supervision and they were designed to meet the needs of different stakeholders perhaps not just investors what we're trying to do is deliver that material information foreign inv investors um that can be embedded into regulatory Frameworks we have been working very closely with the international assurance and audit standard seters to ensure that our standards were urable this is why iosco has also been looking into our standards they have determined they are suitable for use in capital markets to deliver that degree of consistency and try to get rid of you know greenwashing misleading information so it's not just about presenting how green the company is but it's actually about talking about risks and opportunities you know this is not just for regulatory purpose it's also to enable investors to have access to that information yes so that's the design really of our standards no that that very clear I mean so we have the issb work coming with standards on one hand on the other hand we have the Assurance uh the quality of the audit that that key obviously as a CFO I would add the question I'm a crossborder firm uh what about the uh um consistency between all these uh all these standards because we have the issb well okay but what about the US what about the EU this is what we call the inter well is it convergence or is it at least interoperable so how do you WR that right what now that our standards are out we're working towards uh bringing on board Regulators to adopt uh our standards this is why I ask was calling on its members to look into ways but we're also cognizant that uh different uh jurisdictions have different Frameworks in place and of course if we take for instance Europe uh their standards have been designed with a broader sort of scope they are addressing uh needs that go beyond investors so our work there has been to ensure those standards are close together so that uh the informational needs are addressed appropriately so we have been putting side by side our respective standards um you know and I I can claim we have achieved a very material degree of alignment and I think the end goal is to mitigate the reporting burden on companies and allow investors as well to have the same degree of reliable information so what we're doing we've been spending a lot of time in Brussels we've had our European colleagues coming um to our different offices um you know we're trying to work out guidance to provide to preparers to investors as to how our standards were together we should say that ultimately it is important to achieve that degree of convergence alignment in order to deliver that the comparability that is needed it is allowing investors to compare not just across companies but also across Industries and across jurisdictions and that's AB absolutely fundamental to have that degree of global uh convergence it's going to take some time we acknowledge different jurisdictions are at different stages different starting points some have experience with sustainability reporting this is why we're trying to help them through U uh providing support for adoption to get uh at PACE with with that so it's not about race the title of the of the um of the conference it's about suitability and appropriateness but let's don't lose of the end goal which is achieving that degree of consistency and comparability yes well that that that very helpful uh it mean that uh the different part of the world are talking to each other uh you work together and there is some kind of convergence even if it's not identical there is Convergence and consistency and it's at least interoperable that's that's key in terms of cost and in terms of information to investors this is key so that one one one very important point so let me jump to the other side of the of the of the panelist you know because we had this Global regulatory view in terms of disclosure uh I I'd like to come to you Shan you know you have the Asian perspective which is a um also very interesting because you've been working a lot on transition planning uh the asan group of countries have done a lot of taxonomy we we are even following your your your taxonomy some somehow so maybe you could tell us what about you you're doing on transition planning what it mean and also what is the Ling with taxy thank you let me first start off by sharing with you that in Southeast Asia which is a group of 10 Nations what we are trying to do is actually build a sustainable Finance ecosystem and that ecosystem in our minds has three pillars which need to operate alongside each other the first is actually to have a common language that's the tonomy that you were talking about my Philip the second is actually to have a transition frame uh because I'll explain it the transitions are really difficult to do and the third is actually what Jonathan was talking about which is disclosures now we need all these three pillars to work together so what is a transition um and I've been asked this question many times the best way for me to describe a transition is actually the marriage between ambition and reality because we're all at different starting points and we want to reach a common point but the journeys that we will take to reach that common point will actually be different as Jonathan was saying because the starting points are different uh countries at very different stages of development economically socially and have different access to resources so for us it's extremely important that we are able to take this transition Journey minimizing any social or economic dislocation so we hear a lot about just transitions affordable Transitions and I think that is key because we have to come back to the principle of common but differentiated responsibilities so a transition really is to get us from where we are today to where I'm our ambition is and that's the Paris agreement uh Target and what is different from the way we're allocating Capital today transitions actually forward-looking so the challenge for us is how do we know that we are looking ahead in time and yet that journey is going to be achieved because if you made a green investment today it's easy it's at a point in time but transitions are difficult in the respect so uh for us of course what is important is to have a common ambition and I think any transition planning because transitions are so difficult they require structural changes they require changes in the way you operate um and and this has to be planned you don't decarbonize overnight so for us it's really important that that we have the right climate ambition I think that's the first element to transition planning the second is we have to be conf confident of the uh robustness of the ability to deliver and what does that mean it means that you have to have an action plan that really works it means that you have to have the capital because you can have all the plans you want by the capital is not flowing that's absolutely useless the third is there a lot of risk along the way so risk management risk mitigation um governance is extremely important because you have to go to your stakeholders and say this is Journey this is how we're going to do it and of course the last bit is disclosures and Reporting because you need to be monitored you need to know where you are um so these are the key elements for transition it sounds a lot easier than it really is and uh because every country is going to have its own pathway right so you have this issue about uh do you use a uh Global pathway IIA has one you have a regional pathway in Southeast Asia we have the um SDS uh scenario put out by IAA do you use a country pathway Japan has a country pathway or do you use a sectoral pathway AATA has a c pathway so there are many ways to do this and I think there are many options available but it comes down to the firm at the very uh basic level you actually need to be able to get the firms to move uh and what what's happening right now is that we have a lot of uh Frameworks and guidances but they don't provide the regional and um uh firm specificity or even country specificity that Jonathan was talking about so in Southeast Asia the 10 Regulators came together and they issued the Assan transition Finance guidance to provide that specificity um and and how what does it have to do with the taxonomy so the taxonomy is actually a point in time assessment and uh the work we have on the Assan transition Finance guidance Builds on the Assan taxonomy uh which I have to mention is a transition taxonomy because it doesn't have a single threshold for economic activities it actually has up to three so that you can slowly uh build your efforts into the most ambitious uh tier but essentially the asan transition Finance guidance bills on the asan taxonomy to allow companies to create forward-looking Pathways for them to be able to transform the operations and their technology along the tear of the Assan taxonomy at a speed consistent with a science-based pathway just yeah thank you very much Ean so now we see that the there is the uh the transition planning taxonomy and the disclosure there are three uh Dimension which which goes together which should support each other so let's come back to the UAE and uh I like to ask K you you you you work for the uh as an advisor to the EDC chairman and we've seen adx uh while growing so fast and over the past two years and uh I was wondering are you facing this kind of green washing issue and uh what do you expect from the listed firms and how do you address that than I think adx had a tremendous couple of years um and headlines been very much focused on the equity uh side but first let's focus on the debt side because that's really being at the Forefront of the raising of green and sustainable capital um Abu Dhabi issuers have raised over eight billion dollars of green and sustainable Bond and suuk um Capital over the last couple of years this year alone we saw the first Durham green coup issued by Fab we had Mazda's highly anticipated first bond which was of course green and we've also seen issuances by aler Adib taka ADCB and muad many for which has been the first green or sustainable issue issuance under their programs which has been highly exciting now when we look at the debt market and you the bond and SEC Market is highly institutional documentation is done under MMA there's clear use of proceeds and disclosure requirements and as a result you've really seen that be at the Forefront for raising capit and showing what can be done and because it's institutional yet the application of the rigorous analysis the processes of approving those Investments is also pretty welld developed so now if we turn to the equity side and again adx had a tremendous couple of years and this year for the first nine months adx was the third largest home for raising IPO Capital proceeds after China and the US and you just think of the size difference in jurisdictions which I think really uh hits that point home in the first half we had the largest global IPO in in ad not gas and we're very proud to say that 100% of our pgc's um listed companies have issued Standalone sustainability reports and we've seen a great Evolution over the last couple of years in the level of data um that's been provided under that we also launched our ESG select index earlier this week with our partner fitu Russell um which again helps provide a framework and understanding of our most ESG um focused issuers if if you will and I think when you look at the global Equity markets more broadly I think it's it's still very much on a journey and we've seen the World Federation of exchangers really pick up the battern for this with the release of their green Equity principles and now the development of green Equity accreditation and I think this is particularly important and relevant because Equity is more of a retail market and so this will enable investors to really be able to assertain which Investments are green and again when you think about the new generation of investors who want their Investments to be much more aligned to their values and sustainability being at the core of that I think this is very important um development and so I think again to Echo um the points made earlier it's really about developing those global standards that are consistent have interop ility and where there is the veracity of data and the processes behind them to provide conviction um and substance behind them and I think we're still very much on a journey um towards them thank you very much so uh well we have the uh very good example of adx with the index you developing green index somehow which is really interesting like to move to Emmanuel who the CEO of FSR maybe to to tell us what as FSI we doing in order to support the Net Zero transition and and and uh maybe how we can set up this sustainable Hub in the region I think I um I think I discussed that um in my opening remarks earlier um today about what we've been doing and we've been doing a lot as you um mentioned uh from regulatory carbon markets creating a framework for that and green funds and importantly climate transition funds and green bonds and S Cooks um but I want to just go back to the main theme of today which for this panel in terms of the Global Financial Regulators uh Summit yesterday uh I think I think some of the key takeaways from that were that from a regulator's perspective and this was a great collaboration U event because we had Regulators not only from our GCC region in the UAE but we also had Regulators from North America Europe Britain um Asia um Etc all discussing same theme of sustainable finance and how Regulators play their part and I think the first essential element of that is that Regulators as Jean Paul had mentioned earlier are acutely aware of the need for more regulation and more standards uh in this area so that's number one and Regulators I can assure you across the globe are working very hard to create not only the standards but the regulatory Frameworks to help facilitate industry and private Capital to get where it needs to go and that's the 95% shortfall in GRE green transition financing um I think another key area and there's a consensus on this is that though most Securities Regulators have already built into their Frameworks the concept of clear fair not misleading disclosure which can capture greenwashing there needs to be more than just that that Reliance on that current framework and Regulators again are working on developing greater Guidance the FCA only released this week whole Suite of guidance in relation to this area and thirdly and very importantly and I mentioned this earlier today when I spoke about transition that 95% of required capital is not going to go into green which is only 5% it's going into to Greening so building regulatory Frameworks that will facilitate Capital to go into Greening assets is essential and I think transition planning is a is a great Challenge and Eugene you've outlined some of those challenges already and um as Regulators we're cognizant of the fact that transition planning needs to be accountable you need to be able to verify that these trans transition plans are actually taking place how do you do that that's where different standards and rules and regulations have to come in so there's some of the takeaways I took from yesterday I think it was a great success and I'm looking forward to next year's Global regulatory Summit here at AB Finance week thank you very much um I would add if I may that we uh as fsra we also you mentioned that by the way we coordinate the S Finance working group with which is the UAE grouping of all Regulators it's a good example of collaboration as we have in Asia as where we had yesterday so thank you so much I think uh it's time for lunch and then I want toh to thank the panelist I think we can appla them and you