Standard-setting body the International Auditing and Assurance Standard Board (IAASB) has issued a global sustainability assurance standard, in a push to “enhance the trust and confidence” investors and regulators have in sustainability information.
The IAASB approved the International Standard on Sustainability Assurance (ISSA) 5000 project proposal in September last year to develop a new overarching standard for assurance on sustainability reporting to “drive global consistency and comparability”.
The principles-based draft standard – which is out for consultation until 1 December – is suitable for both limited and reasonable assurance engagements on sustainability information reported across any topic.
The standard will apply to sustainability reporting prepared under multiple frameworks, including the Corporate Sustainability Reporting Directive (CSRD), the ISSB’s two disclosure standards, the GRI, and global standards body the International Organization for Standardization (ISO).
An industry participant described ISSA 5000 as “framework agnostic”, adding that the hope is that it will eventually be adopted as the EU-wide standard for CSRD assurance.
The standard was developed with input from various stakeholders and standard setters including the European Commission, Financial Stability Board (FSB), Global Reporting Initiative (GRI), International Corporate Governance Framework (ICGN), International Organization of Securities Commission (IOSCO), International Sustainability Standards Board (ISSB), and US Securities and Exchange Commission (SEC).
ISSA 5000 is suitable for both professional accountant and non-accountant assurance practitioners.
The IAASB said the standard focuses on outcomes rather than procedures to support its scalability and comprehensiveness by limiting possible exception from the principles, as well as to show how a requirement applies to all entities, regardless of industry or sector.
It will begin a series of four roundtables in October as part of its commitment to ensuring broad stakeholder input, with the final standard due to be issued before the end of 2024.
Klaus-Peter Naumann, CEO of Germany’s institute for public accountants IDW, told Responsible Investor that it intended to welcome ISSA 5000.
“German audit firms currently apply the International Standard on Assurance Engagements (ISAE) 3000 for voluntary assurance engagements of non-financial reporting. They are interested in the development of the ISSA 5000, and this global solution is to be welcomed,” he said.
“It also leaves room for national and European specifics to be added. In this regard, the IDW intends to develop further pronouncements to take into account the specific requirements under the CSRD, both at a European and national level,” he added.
France has already started work on this, with auditing oversight body H3C publishing CSRD-specific guidance for assurance service providers in late June.
Sustainability reporting under the CSRD is due to begin in 2025, covering the 2024 financial year, with the first limited assurance engagements due to start in 2024.
H3C said it has produced the guidance in the absence of a European standard for limited assurance on sustainability reporting, while considering the IAASB’s work on ISSA 5000 to “harmonise European and international practices”.
The limited assurance working group – chaired by H3C – conducted 20 hearings with French investors and stakeholders including Amundi, Crédit Agricole, the European Financial Reporting Advisory Group (EFRAG), and TotalEnergies as part of developing the guidance.
H3C said the guidelines are intended to contribute to the development of a professional practice standard that will be mandatory in France for all practitioners performing limited assurance engagements for CSRD reporting, which will eventually be replaced by a European assurance standard.