Foreword

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This document was prepared by Technical Committee ISO/TC 322, Sustainable finance.

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Introduction

In 2019, ISO/TC 322 undertook a stocktake to identify and analyse more than 150 international initiatives addressing diverse aspects of sustainable finance. This revealed many examples of different approaches, from setting voluntary standards to providing best practice and high-level explanation for the development of products and services aimed at supporting sustainable development by financial markets.

The examples analysed give guidance for documenting the qualities or properties of such financial products within a green or sustainable development finance context, whether to support labelling purposes or to reduce deficits from being unspecific or ubiquitous, without proposing, for example, reference or documentation. This bears the risk of what is called “standard shopping” for the lowest quality requirements and allowing greenwashing when advertising, promoting and reporting sustainable finance products and services (SFPS).

As addressed more and more by regulators and consumer organizations, there is a primary need for a comprehensive and unifying standard, as market actors can be confronted with different initiatives providing inconsistent or even contradictory information and advice on development, implementation and communication of SFPS.

Another aspect to consider is that the approach of such guidance depends often on the history, purpose and stakeholders of the organizations behind an initiative. Early initiatives were mainly looking at environmental (“E”) and, over time, began to integrate social (“S”) and governance (“G”), often as an add-on factor to the more mature environmental aspects. On the other hand, analysing the potential ESG gaps or overlays is not only about a limited focus of initiatives as well as overall mission of some initiatives, but can also be a concern for the potential conflicts: such as competing views on functionality, importance and significance, today branded as materiality. And more recently, referring to the United Nations (UN) Sustainable Development Goals (SDGs), further adds more complexity as well as another type of impact identification.

The diversity of initiatives and thus of actors provides ISO/TC 322 with the opportunity to develop a standard by integrating the most holistic approaches by initiatives and other standard providers and best practice of market participants, the providers of products and services. Standards are developed when there is global consensus on their applicability and a recognized market need or opportunity. This process is driven by open-minded collaboration and the pursuit of synergies through international normalization efforts. The opportunity is to develop a common view of SFPS and identify the essential components of quality and potential for contributing to sustainable development.

The document is based on and refers to good practices of finance products and services in international, regional or national finance-sector-related initiatives. It also can be integrated with other economic and cultural boundary conditions which already exist or are about to be developed in many regions of the world.

The requirements and guidance in this document are formulated to allow efficient and effective internal or external assurance and verification to improve internal processes, economic effects and external credibility. This document can also help an organization’s stakeholders to evaluate the general design and specifications of SFPS in order to assess their ESG-related claims and communicated intended impacts.

1 Scope

This document specifies requirements for and gives guidance on the development, embedding, communication, validation and verification of sustainable finance products and services (SFPS). It addresses the product and service areas of lending, asset management, insurance, payment accounts and digital assets.

This document is applicable to any organization that intends to provide or is providing SFPS with an integration of defined environmental, social and governance (ESG) aspects and proof of intended impacts. It can be used for aligning existing SFPS or designing new ones.

This document enables organizations to define, embed, communicate, attribute and effectively evaluate SFPS. It further enables successful marketing and documenting of SFPS objectives, properties and impacts, as well as validation and verification.

2 Normative references

3 Terms and definitions

4 Principles for the development, embedding, communication, validation and verification of SFPS

4.1 Principles

4.2 Application of the principles regarding SFPS

4.3 Life cycle perspective of SFPS and governance aspects

4.4 Engagement with stakeholders

5 General requirements applicable to all SFPS

5.1 General considerations

5.2 General requirements for development of SFPS

5.3 General requirements for embedding SFPS

5.4 General requirements for communication of SFPS

5.5 Validation and verification

6 Specific requirements for lending

6.1 General considerations

6.2 Development requirements for lending

6.3 Embedding requirements for lending

6.4 Communication requirements for lending

6.5 Validation and verification

7 Specific requirements for sustainable financial asset management

7.1 General considerations

7.2 Development requirements for sustainable asset management

7.3 Embedding requirements for sustainable asset management

7.4 Communication requirements for sustainable asset management

8 Specific requirements for sustainable insurance

8.1 General considerations

8.2 Development requirements for sustainable insurance

8.3 Requirements for different types of insurance

8.4 Validation and verification

9 Specific requirements for providing accounts

9.1 General considerations

9.2 Development requirements for providing accounts

9.3 Embedding requirements for providing accounts

9.4 Communication requirements for providing accounts

9.5 Validation and verification

10 Specific requirements for digital assets

10.1 General

10.2 Regulatory framework

10.3 Classification of digital assets

10.4 Development requirements for digital assets

10.5 Embedding requirements for digital assets

10.6 Communication requirements for digital assets

Bibliography