What is happening?
The new standard (International Standard on Sustainability AssuranceTM (ISSA) 5000, General Requirements for Sustainability Assurance Engagements) aims to provide assurance over sustainability information disclosed in sustainability reports, and the consultation process will allow stakeholders to provide feedback on the proposals.
The IAASB’s early consultation aims to achieve two objectives. Firstly, the timely publication and a comprehensive outreach plan will facilitate broad and early feedback on the ISSA 5000 development. Secondly, an extended consultation period will help finalise the standard by 2024. Read the press release here.
The press release states,“When complete, ISSA 5000 will be a stand-alone, overarching standard suitable for both limited and reasonable assurance of sustainability information reported across any sustainability topics.The standard will enable engagements of sustainability information prepared under multiple frameworks and be profession-agnostic, supporting its use by both professional accountant and non-professional accountant assurance practitioners in performing sustainability assurance engagements.”
Why is it happening?
Some jurisdictions have set or proposed assurance requirements for sustainability-related information. For example, the EU’s Non-Financial Reporting Directive (NFRD) allows member states to require independent assurance of non-financial information, with France, Italy, and Spain opting to do so. The Corporate Sustainability Reporting Directive (CSRD) expands the scope of the NFRD and introduces mandatory assurance requirements. The SEC in the US has proposed phased requirements for limited and reasonable assurance on GHG disclosures. Read our analysis of the proposed assurance requirements under the CSRD and SEC proposals here.
In New Zealand, the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 requires mandatory, limited assurance on GHG emissions. Other jurisdictions, such as the UK, Hong Kong, Singapore, and Australia, have signalled the potential need for assurance requirements in the future. Read more here.
Who is developing the assurance standards?
The key standards setters are IASSB and IESBA.
The International Auditing and Assurance Standards Board (IAASB) is an independent standard-setting body that develops and maintains international standards for auditing, assurance, and related services. These standards are intended to enhance the credibility and quality of financial reporting. Read more here.
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and maintains a globally applicable Code of Ethics for professional accountants. The Code sets out fundamental principles and ethical requirements that apply to all professional accountants, regardless of their role or the jurisdiction in which they operate. Read more here.
The International Organization of Securities Commissions(IOSCO) is actively involved in the process and works closely with the standard setters. IOSCO recently published the “Report on International Work to Develop a Global Assurance Framework for Sustainability-related Corporate Reporting”, which can be accessed here.
What are the timelines?
The timelines targeted by IAASB are as follows.
- June 2023: Expected IAASB approval of Exposure Draft
- The latter part of July or early August 2023: Public consultation on the proposed standard to open (earlier than originally scheduled)
- December 2023: Public consultation on the proposed standard to end
- Objective 1: Earlier publication with comprehensive and global outreach strategy to gain broad and early input into the development of ISSA 5000
- Objective 2: Advanced consultation period to better ensure the completion of the final standard in 2024
Sources and further reading
NordESG – Assurance under US SEC Climate Reporting Rules & EU CSRD
IAASB – IAASB advances timeline for consultation for proposal on sustainability assurance
INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS (IOSCO) – Report on International Work to Develop a Global Assurance Framework for Sustainability-related Corporate Reporting