Zhu Guangyao: The World Has Reached a Consensus on Formulating a Unified and Enforceable Global Sustainable Development Standard

Source: World Finance Forum (WFF)

Published: 2021-06-30

On 29 June 2021, a seminar on “Sustainable Development and Theoretical Standard System of ESG Against the Background of Double Carbon Goals”, jointly sponsored by the World Finance Forum and the Institute of Global Sustainable Development of Tsinghua University and co-organized by Zhongchengxin Green Finance Technology (Beijing) Co., Ltd., was held in Beijing. 

Zhu Guangyao, former Vice Minister of Finance and Chief Adviser of the World Financial Forum (WFF) and the Center for BRICS and Global Governance (CBGG), attended the seminar and pointed out that the world has reached a consensus on promoting the formulation of a globally unified and enforceable sustainable development standard, and has initiated the negotiation process to promote the global sustainable development standard. This negotiation will be very challenging. Once this set of standard rules is completed, it requires strong and dedicated commitment from the Member States to implement them. China must take it seriously and be prepared to actively participate in its negotiation process.

Zhu reflected that in 2018, the International Financial Reporting Standards Foundation (IFRS) initiated the establishment of a set of global, reliable, comparable and enforced global sustainable development standards. However, this process was not smooth, and there were many obstacles to the formulation of such diversified and highly executive sustainable development standards in the world. The first one came from the US Trump Administration, who opposed to almost any multilateral institutional arrangements, and the US Securities and Exchange Commission (SEC) has resisted IFRS initiative from the very beginning. The situation in the United States started to change this year when President Biden took office on January 20, who seemed to advocate “a return to multilateralism”. In March, the SEC Chairman made it clear that a standard that can be enforced in the international community should be formulated to cover the fields of climate change and social development. Subsequently, US Treasury Secretary Janet Yellen publicly expressed her support for establishing global sustainable development standards and conducting international negotiations. With the significant change of US position on this matter, the attitude of the International Securities Commission Organization has also turned positive. At present, the world has reached a consensus on promoting the formulation of a globally unified and enforceable sustainable development standards.

Zhu mentioned that at present the IFRS Foundation is consulting with countries around the world on the relevant process of promoting the negotiation of global sustainable development standards. It is necessary for IFRS Foundation to promote the establishment of the global sustainable development standards committee and the relevant negotiation process. This negotiation will be very challenging. Once this set of standard rules is completed, it will have a strong binding power over the implementing Member States. China must take it seriously, making preparations and actively participating in the negotiation process. The attitude of the United States has changed from a very negative one before this year to a positive one after this year and now it seems to be even more positive. The United States hopes to integrate some standards formulated by their Financial Standards Committee into the negotiation of the global sustainable development standards, but theirs are not consistent with the international financial reporting standards. In this case, the United States should play a greater role in this, but Europe does not agree with it. Therefore, this negotiation will be a fierce and arduous game.

Zhu pointed out that during this fierce and arduous negotiation process, China should actively devote itself to global governance and give full play to its influence and leadership in formulating the global sustainable development standards. The choice of our negotiators should reflect the national will and the demand of Chinese enterprises, accurately reflecting China’s policy demands, and playing a spearheading role in the negotiation process. Meanwhile we should properly handle relevant challenges and problems, serve the overall goal of our high-quality economic development and “Double Carbon” achievement, contributing to China’s closer integration with the world and its strong, sustainable, balanced and inclusive economic development.