IESBA Launches Public Consultation on New Ethical Benchmark for Sustainability Reporting and Assurance

The International Ethics Standards Board for Accountants (IESBA) has announced the launch of two Exposure Drafts (EDs), setting forth the first comprehensive suite of global standards on ethical considerations in sustainability reporting and assurance.

The first Exposure Draft, titled "International Ethics Standards for Sustainability Assurance (IESSA)," encompasses revisions to the existing Code related to sustainability reporting. Simultaneously, the second Exposure Draft, "Using the Work of an External Expert," proposes an ethical framework for evaluating the competence, capabilities, and objectivity of external experts in sustainability-related matters.

These proposed standards aim to establish a clear framework of expected behaviors and ethical provisions, applicable to all sustainability assurance practitioners and professional accountants involved in sustainability reporting. The overarching goal is to mitigate greenwashing, ensuring the quality and reliability of sustainability information, thereby fostering greater public and institutional trust.

Mitigating Greenwashing and Enhancing Trust

With sustainability information playing an increasingly crucial role for capital markets, consumers, corporations, governments, and society, the proposed ethics standards become particularly relevant. They address the challenges posed by the growing importance of sustainability and the involvement of new players outside the accounting profession in sustainability assurance.

The standards focus on preventing greenwashing—a deceptive practice where an organization exaggerates or fabricates its commitment to sustainability. By providing a comprehensive ethical framework, the IESBA aims to uphold the integrity and objectivity of sustainability information, ensuring it meets the highest standards of transparency and credibility.

The development of both Exposure Drafts was closely coordinated with the International Auditing and Assurance Standards Board (IAASB), emphasizing the importance of global collaboration in establishing effective sustainability standards infrastructure.

Gabriela Figueiredo Dias, Chair of the IESBA, emphasized the significance of ethics in shaping acceptable behaviors and right decisions to avoid bias in sustainability information. She highlighted that the proposed standards would serve as a cornerstone of ethical behavior with far-reaching benefits.

Jean-Paul Servais, Chair of the Board of the International Organization of Securities Commissions (IOSCO), welcomed the publication and called on issuers, investors, and assurance providers to participate in the IESBA’s consultation. He stressed that trust in sustainability disclosures would be enhanced when supported by globally accepted standards regarding ethical behavior and independence.

International Accreditation Forum’s Support

Coinciding with the public consultation, the International Accreditation Forum (IAF) announced its intention to recommend the use of IESBA's proposed IESSA in accrediting and authorizing conformity assessment bodies for assurance work on corporate sustainability disclosures.

The move toward creating a robust sustainability standards infrastructure involves not only high-quality reporting and assurance standards but also a global baseline of ethics standards. The IESBA’s proposed standards aim to complete and support the effectiveness of this infrastructure, ensuring a harmonized and trustworthy approach to sustainability reporting and assurance worldwide.

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