By Huw Jones
LONDON (Reuters) - The European Union on Wednesday deflected concerns over its drive to formulate rules requiring companies to show investors how climate change will affect their activities, saying that waiting for a global approach could take years.
The EU unveiled groundbreaking proposals on Wednesday for sustainability disclosures by companies in the 27 country bloc, and a classification system to define what can be labelled a "green" asset or activity in a disclosure.
It leaps ahead of global efforts to create an international sustainability standards board to write disclosure rules, details of which will be published in time for the UN COP26 global climate change conference in November.
Investors have called for global standards to replace a patchwork of norms now emerging, to make comparisons between companies easier and avoid 'greenwashing' or firms overplaying their green credentials.
Global financial regulators have also thrown their weight behind the proposed new sustainability standards board, but it has not stopped the EU from pushing ahead on its own.
"We are a global frontrunner," the EU's financial services chief Mairead McGuinness told an online event held by financial industry body IIF.
"At the moment we have a confused situation, an array of different standards companies can use," she said.
IMF Managing Director Kristalina Georgieva welcomed the EU initiative. "It will be critical for the world to converge on common principles, disclosures, and standards for more reliable sustainability information," she said in a tweet.
Axel Weber, chairman of UBS bank, said global financial institutions need international rules to create a mobile pool of capital that can invest in climate-friendly assets anywhere.
"It's good we are seeing a European approach as opposed to a fragmented approach we have seen in Europe many times in the past, but we need a global approach," Weber said.
Foreign regulators could take the EU's approach into account when forging their own, but it was unclear to what degree the EU would be open to approaches from elsewhere, Weber said.
McGuinness said the EU will work with global initiatives, but it should be noted that similar efforts, such as creating international accounting rules, did not happen overnight.
"There isn't any conflict here, we are all working in one direction," McGuinness said.
"It will be bumpy... we don't have time to waste."