IDB and IFRS Foundation Join Forces to Boost Sustainability Reporting in LAC

This collaboration, solidified through a Memorandum of Understanding (MoU), seeks to accelerate the adoption and implementation of the IFRS Sustainability Disclosure Standards across the region’s capital markets.

In a significant step toward enhancing sustainability transparency and fostering sustainable finance in Latin America and the Caribbean (LAC), the Inter-American Development Bank (IDB), IDB Invest, and the IFRS Foundation have formalized a groundbreaking strategic partnership. This collaboration, solidified through a Memorandum of Understanding (MoU), seeks to accelerate the adoption and implementation of the IFRS Sustainability Disclosure Standards across the region’s capital markets.

Catalyzing Regional Adoption Through a Unified Action Plan

At the heart of the agreement lies a robust action plan aimed at equipping both public and private sector actors with the necessary tools, knowledge, and capacity to align with the new global baseline for sustainability-related disclosures. These standards, developed by the International Sustainability Standards Board (ISSB), are designed to help companies communicate their sustainability-related risks and opportunities clearly to investors, enhancing informed decision-making and building investor confidence.

The action plan will unfold across three interlinked pillars:

1. Knowledge Sharing

This component emphasizes educational and informational initiatives, including:

• A comprehensive policy paper detailing the regional benefits of adopting the IFRS Sustainability Disclosure Standards.

• A self-assessment tool pilot for private banks to gauge their readiness and identify gaps in current disclosure practices.

• A regional case study that will highlight best practices and lessons learned from early adopters, intended to guide others in the transition process.

These tools will help financial institutions and market participants understand the practical advantages of sustainable reporting, thereby encouraging broader adoption.

2. Capacity Building

To support implementation at scale, the partnership will deliver targeted support to strengthen both institutional and technical capacity:

• Regulatory agencies in the region will receive structured guidance and technical support through the IDB.

• IDB Invest will lead efforts to build capacity among private financial institutions, focusing on integrating sustainability and climate-related risk considerations into reporting frameworks.

This pillar seeks to foster a culture of sustainability within financial systems, enabling more resilient and transparent markets.

3. Advocacy and Policy Engagement

Recognizing the importance of political will and regulatory coherence, this strategic area focuses on:

• Engaging with governments, regulators, and industry leaders to promote policy alignment with IFRS standards.

• Delivering tailored technical assistance to assist with the legislative and regulatory changes necessary for the standards’ full integration.

This targeted engagement will ensure that countries in the region are not only adopting the standards but are also able to implement them effectively.

A Shared Vision for Transparent and Resilient Markets

The leaders of the participating organizations underscored the transformative potential of this partnership. IDB President Ilan Goldfajn emphasized that transparency and alignment through IFRS standards can significantly enhance decision-making for issuers, investors, and regulators alike. “This partnership is about accelerating the adoption process across the region and helping in its implementation,” he stated.

Michel Madelain, Managing Director of the IFRS Foundation, echoed this sentiment, noting the rising interest among public authorities in LAC to leverage these standards to strengthen their capital markets. “Our partnership with the Inter-American Development Bank Group will deliver critical support to help these markets benefit from the full potential of effective sustainability-related disclosure,” Madelain added.

Leading by Example

In a demonstration of its commitment, the IDB itself is embarking on a multi-year roadmap to align its own disclosures with the IFRS Sustainability Disclosure Standards. This move positions the bank not only as a promoter but also as a practitioner of sustainability transparency, setting a benchmark for other institutions in the region.

Looking Ahead

The formalization of this strategic partnership comes at a time of growing global urgency for sustainable economic development and climate resilience. With this initiative, the IDB, IDB Invest, and the IFRS Foundation are paving the way for a more transparent, informed, and sustainable financial future for Latin America and the Caribbean.