The International Ethics Standards Board for Accountants (IESBA) has released exposure drafts for the first suite of global standards on ethical considerations in sustainability reporting and assurance to “mitigate greenwashing” and “elevate the quality of sustainability information”.
IESBA is an independent global standard-setting body for ethical guidance in financial and non-financial information. It is seeking feedback from accountants, sustainability practitioners, regulators and investors on the proposed rules.
The standards will aim to promote greater confidence in sustainability reporting and assurance as jurisdictions prepare for incoming mandatory disclosure and assurance requirements.
The EU’s Corporate Sustainability Reporting Directive will see its first reporting cycle this year, alongside the first limited assurance engagements.
Other countries including Australia, Singapore, Taiwan and Turkey also plan to implement assurance requirements for their respective sustainability reporting frameworks – all based on the International Sustainability Standards Board’s two sustainability standards – in the next few years.
The first IESBA draft standard – which is out for consultation until 10 May – proposes new ethics standards for sustainability assurance and sustainability-related assurance and reporting, as well as revisions to the standard setter’s existing code to provide a “clear framework of expected behaviours and ethics provisions” for sustainability assurance practitioners and accountants involved in sustainability reporting.
The new rules address the five fundamental principles of ethics for sustainability assurance practitioners: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
The second draft rule puts forward a new framework to support accountants and sustainability assurance practitioners in assessing the work of external experts to ensure they have the necessary skills and objectivity.
External experts may be used for assuring certain elements of sustainability reports, such as the calculation of greenhouse gas emissions.
The consultation for this second standard, which is due to be implemented in 2025, will end on 30 April.
IESBA said the proposed standards are a “global baseline” of ethics rules aimed at “ensuring the integrity and objectivity” of sustainability information.
The draft rules were developed in “close co-ordination” with the International Auditing and Assurance Standards Board (IAASB), which belongs to the same body of standard setters as IESBA.
It follows the IAASB’s launch of a draft global sustainability assurance standard (ISSA 5000) in August. The IAASB ended its consultation on the standard in December, and is expected to finalise it by the end of this year.