IESBA Releases Proposed Ethics Standards to Prevent Greenwashing in Sustainability Reporting

Global standards-setting board the International Ethics Standards Board for Accountants (IESBA) announced today the release of its new proposed standards for ethical considerations in sustainability reporting and assurance, aimed at mitigating greenwashing and elevating the quality of reported sustainability information.

The new IESBA proposals include the exposure drafts “International Ethics Standards for Sustainability Assurance” (IESSA), setting out a framework of expected behaviors and ethics provisions for sustainability assurance practitioners and professional accountants involved in sustainability reporting, and “Using the Work of an External Expert,” providing a framework to be applied by professional accountants or sustainability assurance practitioners in evaluating the competence, capabilities and objectivity of external experts, in order to use their work.

The new proposed standards come as companies globally gear up to begin reporting on sustainability and climate-related risks, opportunities and impacts, with the emergence of a series of new sustainability disclosure standards and regulatory requirements, including the EU’s CSRD rules, the U.S. SEC’s upcoming climate disclosure rules, and the recently launched IFRS climate and sustainability reporting standards by the International Sustainability Standards Board (ISSB).

The proposals also follow the launch last year by the International Auditing and Assurance Standards Board (IAASB) of a proposed standard for sustainability reporting assurance. According to the IESBA, the new ethics standards, which were developed in coordination with the IAASB, are “especially relevant” with sustainability information becoming more important to multiple stakeholders, including investors, consumers, companies and governments.

The IESBA added that “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.”

Gabriela Figueiredo Dias, Chair of the IESBA, said:

“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.”

Alongside the release, the IESBA launched a consultation into the new exposure drafts, open until April 30 for the External Expert proposal, and until May 10 for the sustainability standard proposal. Click here to access the exposure drafts.