By Huw Jones

LONDON (Reuters) – Global market regulators have thrown their weight behind plans for a new international standards body for company disclosures on climate risks and sustainability, saying it would cut the scope for so-called greenwashing.

The current patchwork of voluntary public and private initiatives for disclosures have at times given misleading and inconsistent information to investors, said Ashley Alder, chair of the International Organization of Securities Commissions or IOSCO.

“This can lead to cherry picking and shopping around for reporting standards in ratings… this makes greenwashing obviously easier,” Alder told a City & Financial conference.

Greenwashing refers to companies painting a more flattering picture of sustainability.

Alder said a stronger global effort is needed and the commitment of U.S. President Joe Biden to tackling climate change will help.

The London-based IFRS Foundation, which writes accounting rules for over 140 countries, will propose a similar body for writing climate disclosures standards in September.

“It would build on the IFRS’ proven standard setting process for financial accounting which rests on a rigorous governance structure to ensure public accountability and widspread acceptance,” said Alder, who also heads Hong Kong’s markets watchdog.

“It addresses head on the problem of noise resulting from a multiplicity of private sector standards addressing the same market,” he said.

The European Union and China aim to issue a “common ground” taxonomy or definition of “green” and sustainable investments.

“This could be the largest single climate finance market,” Alder said.

IOSCO, which groups regulators from across the world, including the United States, Japan and Europe, is now engaged in accelerated, far more coordinated efforts to push forward climate finance, Alder said.

“International organisations, national authorities and the private sector now have no real option other than to participate. If they don’t, they risk getting left behind.”

(Reporting by Huw Jones;Editing by Elaine Hardcastle)