The International Ethics Standards Board for Accountants (“IESBA”) today announced the launch of two Exposure Drafts (EDs):

• International Ethics Standards for Sustainability Assurance ED, which includes revisions to the existing Code related to sustainability reporting;
• Using the Work of an External Expert ED

The Exposure Draft on International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and ethics standards for sustainability reporting proposes a clear framework of expected behaviors and ethics provisions for use by all sustainability assurance practitioners regardless of their professional backgrounds, as well as professional accountants involved in sustainability reporting. The goal of these standards is to mitigate greenwashing and elevate the quality of sustainability information, thereby fostering greater public and institutional trust in sustainability reporting and assurance.

The Exposure Draft on Using the Work of an External Expert proposes an ethical framework to guide professional accountants or sustainability assurance practitioners, as applicable, in evaluating whether an external expert has the necessary competence, capabilities and objectivity in order to use that expert’s work for the intended purposes. The proposals also include provisions to aid in applying the Code’s conceptual framework when using the work of an external expert.

These proposed ethics (including independence) standards are especially relevant in a context where sustainability information is increasingly important for capital markets, consumers, corporations and their employees, governments and society at large, and when new providers outside of the accounting profession play a prominent role in sustainability assurance.

To coincide with the launch of the public consultation, the International Accreditation Forum (IAF) has announced its intention to stipulate to national accreditation bodies around the world that the IESBA’s proposed IESSA are to be used when accrediting and authorizing conformity assessment bodies to carry out assurance work on corporate sustainability disclosures¹.

The creation of an effective sustainability standards infrastructure requires not only high-quality sustainability reporting and assurance standards, but also a global baseline of ethics (including independence) standards to ensure the integrity and objectivity of sustainability information. The IESBA’s proposed standards are aimed at completing and supporting the effectiveness of that infrastructure. The development of both EDs was closely coordinated with the International Auditing and Assurance Standards Board (IAASB).

Gabriela Figueiredo Dias, Chair of the IESBA, commented, “Ethics is about acceptable behaviors and right decisions to avoid bias in sustainability information and foster trust. From investors looking for transparent and credible information, to consumers wanting to ensure the reliability of companies’ narratives about the sustainable credentials of their products and practices, and companies wanting to be trusted, all users of sustainability disclosures have a vested interest in ensuring ethical choices by the preparers and assurers of such information. These proposed standards will 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), said, “I am delighted to welcome today’s publication and call on issuers, investors and assurance providers to participate in the IESBA’s consultation. Sustainability disclosures are undeniably high on the agenda of investors globally. Trust in such disclosures will be enhanced when they receive external assurance based upon globally accepted standards regarding ethical behavior and independence, that have been developed in the public interest. IOSCO will continue to play a key role in promoting global consistency in the assurance of sustainability-related disclosures by issuers and support its members and other stakeholders to enhance trust in corporate sustainability-related reporting.”

Alan Johnson, Chair of the IESBA and IAASB Stakeholder Advisory Council (SAC), independent corporate director, and Chair of the Good Governance Academy, stated: “IESBA’s Exposure Draft reflects the increasing demand for greater ethics and independence in corporate sustainability reporting. As the inaugural Chair of the Stakeholder Advisory Council, I view the proposed standards as critical to enhancing the integrity and credibility of sustainability information. These standards are a significant step towards ensuring that sustainability disclosures are ethically grounded and universally trusted while also enabling businesses around the world to provide full transparency of progress towards achieving sustainability goals and objectives.”

The development of the standards was preceded by extensive outreach, including four global roundtables which took place in March and April 2023 in Paris, Singapore, Sydney and New York. The roundtables involved over 140 senior-level representatives from stakeholders from very different jurisdictions and backgrounds, with a significant participation of non-professional accountants.

How to Comment 

The IESBA invites all stakeholders to provide their feedback on the EDs by visiting the IESBA’s website. Comments on the Using the Work of an External Expert ED are requested by April 30, 2024, and on the Sustainability ED by May 10, 2024.