Ethical Foundations for Sustainable Growth: IESBA’s New Standards
The IESBA Board has approved groundbreaking ethics standards for sustainability reporting and assurance, along with key revisions to the Code on the use of experts.
The International Ethics Standards for Sustainability Assurance (IESSA) establish a comprehensive ethical and independence framework designed to safeguard:
- Investors, by ensuring accurate and reliable sustainability disclosures;
- Consumers, by protecting against false or deceptive claims;
- Society, by preventing unethical financial activities hidden under “green” initiatives.
These new global standards tackle significant challenges in sustainability reporting and assurance, focusing on ethical risks such as:
- Conflicts of interest that could undermine objectivity;
- Undue pressure to meet external expectations;
- Biases that result in misleading sustainability claims.
Additionally, the Use of Experts revisions provide clear guidance on evaluating the competence, objectivity, and capabilities of external experts. These measures are essential to ensuring that sustainability assurance is both trustworthy and effective.
Business Benefits
For businesses, the new standards provide several advantages:
- Improved Reputation: By aligning with global best practices, companies enhance their reputation as leaders in responsible and transparent sustainability reporting.
- Increased Investor Confidence: Rigorous ethical standards foster greater trust from investors, who rely on accurate and credible sustainability disclosures for decision-making.
- Reduced Legal and Compliance Risks: Adhering to the new ethical framework helps mitigate the risk of legal challenges or regulatory scrutiny related to misleading or deceptive sustainability claims.
- Better Strategic Positioning: Companies that adopt these standards position themselves as responsible and forward-thinking, gaining a competitive edge in the growing market for sustainable products and services.
A Commitment to Integrity and Transparency
This milestone reinforces the IESBA’s dedication to fostering integrity, transparency, and trust in the sustainability ecosystem. The global launch is set for early 2025, pending certification by the Public Interest Oversight Board (PIOB). This event will align with the release of the International Auditing and Assurance Standards Board’s (IAASB) ISSA 5000, completing the global framework for sustainability reporting and assurance.