The auditing commonplace, generally known as ISSA 5000, goals to give traders confidence that an organization just isn’t greenwashing in its sustainability experiences – just like how regulators require third-party accounting corporations to assessment monetary statements to protect towards fraud.
Previous to the IAASB’s new commonplace, there have been no standalone pointers for sustainability assurance suppliers past a broad set of assurance requirements referred to as the ISAE 3000, which offers high-level steerage for non-financial reporting.
The brand new commonplace was accepted by the IAASB final month and can kick in from 15 December 2026. In response to the timeline posted on the worldwide requirements physique’s web site, it’ll additionally publish a variety of steerage and utility supplies by subsequent January.
IAASB first proposed its guidelines for auditing company local weather disclosures final August, barely two months after the Worldwide Sustainability Requirements Board (ISSB) launched its inaugural framework for sustainability reporting.
ISSA 5000 can be utilized to guarantee disclosures are aligned with main reporting requirements, together with the ISSB, World Reporting Initiative (GRI) and European Union’s sustainability reporting requirements.
Final month, ISSB’s vice chair Sue Lloyd congratulated IAASB on finalising its assurance commonplace, saying that the ISSA 5000 is “an necessary element” that may allow corporations to “present high-quality, comparable, decision-useful disclosures for traders”.
Carol Adams, chair of GRI’s World Sustainability Requirements Board, stated that whereas she is inspired that disclosures made utilizing the GRI commonplace has a better charge of assurance than another disclosure frameworks, exterior assurance has but to develop into widespread.
In 2022, 40 per cent of disclosures utilizing the GRI commonplace obtained assurance, based on an evaluation by the Worldwide Federation of Accountants. In the meantime, the peace of mind charge was 11 per cent and three per cent for these referencing Sustainability Accounting Requirements Board (SASB) requirements – now subsumed underneath the ISSB – and the Activity Power for Local weather-related Disclosures (TCFD) respectively.
Aside from the speed of assurance, ISSA 5000 might additionally convey up the credibility of sustainability experiences ready in accordance with the GRI commonplace, stated Adams.
Ping-Sheng Koh, professor of accounting and administration management at ESSEC Enterprise College, Asia Pacific (APAC), informed Eco-Enterprise that the ISSA 5000 is well-positioned to fulfill the rising demand for sustainability assurance providers.
“As jurisdictions worldwide, together with Singapore, introduce obligatory local weather reporting necessities, there’s a surge within the want for certified professionals to offer assurance providers on sustainability-related disclosures,” he stated.
Within the APAC area thus far, solely Australia and New Zealand have mandated restricted exterior assurance – the baseline stage of assurance – for an organization’s direct, oblique and worth chain emissions, or Scope 1, 2 and three emissions.
The timelines for exterior assurance in Singapore and Malaysia, two newest jurisdictions to mandate ISSB-aligned disclosures for giant listed corporations from 2025, are nonetheless subjected to additional consultations. The previous has proposed requiring exterior restricted assurance, according to both ISSA 5000 or Worldwide Organisation for Standardisation (ISO) 14064-3, ranging from 2027.
Alan Vallance, chief government of London-based skilled accounting physique, the Institute of Chartered Accountants in England and Wales (ICAEW), noticed that the finalised textual content of ISSA 5000 clarified the distinction between restricted and cheap assurance, which “was a key concern” on the draft stage, significantly across the extent of proof and threat evaluation that must be obtained for the 2 forms of assurance.
Cheap assurance is a better stage of assurance that entails a deeper assessment of sustainability information and processes.
“The usual has been developed at commendable pace, and whereas it isn’t excellent, it units a strong basis for future sustainability initiatives to deal with complicated areas reminiscent of materiality and group engagement in additional depth,” stated Vallance.
“We additionally assist the proposed efficient date, which offers corporations with 18 to 24 months to arrange for implementation,” he stated.
Greenwash curb?
ISSA 5000 considers failing to report any important impacts on stakeholders that an organisation has recognized, simply because they’re unfavourable, as a “materials misstatement” which quantities to greenwashing. However trade gamers stated that the steerage alone just isn’t adequate to stop greenwashing.
Vallance stated the ICAEW recognises the IAASB’s assurance commonplace as solely “one a part of the answer” to greenwash. It can’t fully get rid of the dangers of deceptive claims, particularly when information high quality and measurement stay difficult, he added.
“To fight greenwashing successfully, ISSA 5000 must be complemented by sturdy regulatory frameworks, sturdy enforcement and ongoing stakeholder vigilance,” Vallance stated, stressing the necessity for the usual to be constantly adopted throughout all jurisdictions.
Koh echoed his sentiments, saying that ISSA 5000 “can’t assure the truthfulness or meaningfulness of the knowledge contained inside them, given a lot of the underlying info might be troublesome to measure and confirm”.
“Along with ISSA 5000, sturdy regulatory frameworks are important to carry corporations accountable for sustainability claims,” he stated. Traders and different stakeholders should additionally play a extra lively position in demanding transparency, whereas growing sturdy sustainability metrics and efficiency indicators that may enhance the comparability of experiences, Koh added.
As Eco-Enterprise reported in March, there stays no regulatory oversight of assurance suppliers to make sure their independence and reliability.
With Huge 4 accounting corporations – Deloitte, Ernst & Younger, KPMG and PwC – which already dominate the monetary audit market now changing into the most important gamers in sustainability assurance, corporations that use a single auditor for thier monetary and sustainablility experiences will should be conscious of potential conflicts of curiosity, stated Mak Yuen Teen, professor of follow and director of the Centre for Investor Safety on the Nationwide College of Singapore Enterprise College.
