IESBA Introduces Ethical Standards to Tackle Greenwashing in Environmental Reporting

In a significant development for the accounting and sustainability sectors, the International Ethics Standards Board for Accountants (IESBA) unveiled its latest proposed standards targeting the ethical aspects of sustainability reporting and assurance. This initiative aims to curb greenwashing practices and enhance the reliability of sustainability disclosures.

A Robust Framework for Ethical Sustainability Practices

The proposed standards, encapsulated in the “International Ethics Standards for Sustainability Assurance” (IESSA), outline the ethical conduct and expectations for professionals engaged in sustainability assurance and reporting. Another key document, “Using the Work of an External Expert,” offers guidelines for assessing the expertise and impartiality of external consultants, ensuring their contributions meet the required ethical and professional standards.

These proposals emerge as the corporate world prepares for a new era of sustainability and climate-related disclosures, driven by evolving standards and regulatory mandates like the EU’s Corporate Sustainability Reporting Directive (CSRD), the forthcoming climate disclosure regulations from the U.S. Securities and Exchange Commission (SEC), and the International Sustainability Standards Board’s (ISSB) climate and sustainability reporting frameworks.

The IESBA’s initiative aligns with the broader movement towards standardized sustainability reporting, evidenced by the International Auditing and Assurance Standards Board’s (IAASB) recent efforts in sustainability assurance standards. The IESBA emphasizes the critical role of ethics, including principles of independence, in ensuring the credibility and objectivity of sustainability reports, which are increasingly vital to a diverse group of stakeholders, from investors to government entities.

This proposal marks a pivotal step in establishing a global ethical foundation for sustainability reporting, aiming to foster trust and integrity in environmental and social disclosures across industries.