IBA Report: ESG's Impact on Capital Markets

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by KnowESG
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The International Bar Association (IBA) has released a new report highlighting the increasing significance of environmental, social, and governance (ESG) factors in capital market transactions worldwide.

The "IBA Capital Markets Forum and Securities Law Committee ESG Survey 2022" report presents valuable insights gathered from over 30 jurisdictions. It offers an overview of ESG disclosure regulations in various countries, including the extent to which these disclosures have become mandatory in response to regulatory trends and the demands of institutional investors.

David Flechner, Partner at Allen & Overy in New York and Vice Chair of the IBA Mergers and Acquisitions Subcommittee of the IBA Securities Law Committee expressed his enthusiasm for the survey's comprehensive analysis of ESG disclosure regulations in global financial markets.

He praised the IBA's ability to bring together top practitioners from diverse backgrounds, enabling the creation of this cutting-edge resource. Flechner also highlighted the pleasure he experienced while collaborating with esteemed colleagues to develop and implement this valuable initiative.

The ESG Survey 2022 revealed that ESG disclosures were mandatory in most of the jurisdictions examined, reflecting a global shift towards increased transparency in ESG reporting.

The survey emphasised that listed companies and large corporations were the primary recipients of ESG reporting obligations, underscoring the significance of this practice for entities with substantial environmental and social impacts.

Additionally, the survey identified a notable absence of universally accepted standards for ESG reporting. This lack of consistency could pose challenges for companies operating in multiple jurisdictions and investors aiming to compare ESG performance across different organisations.

Rabel Z Akhund, Founder of Akhund Forbes in Pakistan and Bangladesh and Membership Officer of the IBA Capital Markets Forum, stressed the significance of the survey's findings, emphasising the increasing importance of ESG disclosures in capital market transactions.

He also stressed the necessity for enhanced transparency and uniformity in ESG reporting. Expressing pleasure in collaborating with colleagues from the IBA Securities Law Committee and the Capital Markets Forum, Akhund commended the survey as a testament to the IBA's extensive global reach and expertise.

ESG factors are gaining importance among investors, and companies that fail to provide transparent and accurate ESG disclosures risk losing investor trust and suffering reputational harm. The absence of clear regulations and guidance on ESG disclosures may lead to inconsistent and inadequate reporting, making it challenging for investors to make well-informed decisions. Consequently, this lack of trust in capital markets can have negative repercussions for the legal profession and society.

Patrick Schleiffer, Website Officer of the IBA Securities Law Committee and Partner at Lenz & Staehelin in Zurich said that neglecting ESG disclosures may result in heightened regulatory scrutiny and legal liabilities for non-compliant companies. Schleiffer stressed the importance of transparency and accuracy in ESG reporting for sustainable and responsible investing and a robust capital market ecosystem. Expressing gratitude to colleagues for their valuable contributions, he urged companies worldwide to heed the survey's findings, adopt a comprehensive and standardised approach to ESG disclosures, and foster trust among investors and stakeholders to future-proof their businesses.

To view and compare company ESG Ratings and Sustainability Reports across sectors, follow our Company ESG Profiles page.

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Source: IBA

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