IESBA Sustainability Standards

In January 2024, the IESBA released two exposure drafts on proposed ethics standards for sustainability reporting and assurance:

• International Ethics Standards for Sustainability Assurance ED proposes a clear framework of expected behaviours and ethics provisions for use by all sustainability assurance practitioners, regardless of their professional backgrounds, as well as professional accountants involved in sustainability reporting.
• Using the Work of an External Expert ED proposes an ethical framework to guide professional accountants or sustainability assurance practitioners, as applicable, in evaluating whether an external expert has the necessary competence, capabilities and objectivity in order to use that expert’s work for the intended purpose.

The comment period for the Use of External Experts ED closed on 30 April 2024, and Sustainability ED closed on 10 May 2024.

Read APESB submissions on the IESBA Using the Work of an External Expert ED and International Ethics Standards for Sustainability Assurance ED.

IESBA establishes a Sustainability Reference Group

On 30 June 2023, the IESBA announced the establishment of the Sustainability Reference Group (SRG) to support the work of its Sustainability Task Force. The SRG members will serve as a “sounding board” to the Sustainability Taskforce, providing insights, expertise and guidance in the development of worldwide ethics and independence standards for sustainability reporting and assurance. APESB CEO and IESBA Board Member Mr. Channa Wijesinghe will chair the SRG. Read the IESBA Media Release

The Treasury of Australia have conducted three consultations and released proposed legislation on climate-related financial disclosure in Australia.

In response to the first consultation which sought initial views on key considerations for the design and implementation of standardised, internationally‑aligned requirements for disclosure of climate‑related financial risks and opportunities in Australia, APESB submission highlighted its role in developing and maintaining a robust ethical framework to underpin Australia’s reporting and assurance activities.

APESB’s submission to the second consultation was supportive of the proposed positions, however, it raised a concern that the framework for professional and ethical standards was not explicitly mentioned or considered.  APESB recommended the Treasury consider the comprehensive requirements in the Code, which could be applied to all those preparing and presenting climate-related information and the related assurance reports.

The third consultation was on proposed amendments to the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 (Cth) to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities.

On 27 March 2024, the climate-related financial disclosures Treasury Bill – Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (the Bill) was introduced into the House of Representatives. It is still being considered by the Senate.

The climate-related financial disclosures are in Schedule 4 of the Bill which empowers the AASB to issue internationally aligned sustainability reporting standards that require entities within the scope of the mandatory climate-related financial disclosure regime to prepare an annual sustainability report to disclose their climate risks and opportunities in accordance with the new reporting standards. The commencement date for reporting is proposed to be for financial years beginning on or after 1 January 2025. Further information on the Bill can be found on the Parliament website.

On 30 March 2023, APESB and CPA Australia held a joint interactive panel event in Sydney on global developments in ethics and assurance for sustainability. The discussion was moderated by APESB CEO and IESBA Member Channa Wijesinghe and included the following distinguished panellists:

– Mark Babington – Executive Director of Regulatory Standards at the Financial Reporting Council UK and IESBA Member

– Bill Edge – Chair of the Australian Auditing and Assurance Standards Board (AUASB) and Member of the International Auditing and Assurance Standards Board

– Doug Niven – Chief Accountant, Australian Securities and Investments Commission (ASIC)

– Marje Russ – Chair of the New Zealand Auditing and Assurance Standards Board (NZAuASB)

On 2 August 2023, the IAASB issued its exposure draft on the proposed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements for public consultation with comments due by 1 December 2023.

The proposed ISSA 5000 will serve as a comprehensive, stand-alone standard suitable for any sustainability assurance engagement. Both accountants and non-accountant assurance practitioners can use it to perform high-quality sustainability assurance engagements.  To complement this release, the Board have also issued Frequently Asked Questions on the proposed ISSA 5000. Read the IAASB Media  Release.

The IAASB is in the process of analysing responses and revisions to the proposed ISSA 5000. The IAASB intends to approve the final standard in September 2024, with publication before the end of 2024.

In July 2023, the ISSB released the first two IFRS Sustainability Disclosure Standards:

• IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information; and
• IFRS S2 Climate-related Disclosures.

The standards are effective from 1 January 2024, but individual jurisdictions may elect a different date for adoption.

In July 2023, the International Organization of Securities Commissions (IOSCO) announced its endorsement of the ISSB standards. The IOSCO have called on its 130 member jurisdictions to consider how they can incorporate the ISSB standards into their respective regulatory frameworks to deliver consistency and comparability of sustainability-related disclosures worldwide.

In October 2023, the AASB released an Exposure Draft ED SR1 which proposes climate-related financial disclosure requirements.

The public comment period for ED SR1 closed on 1 March 2024. The ED SR1 encompasses the following three draft Australian Sustainability Reporting Standards (ASRS Standards):

– Draft ASRS 1 General Requirements for Disclosure of Climate-related Financial Information.

– Draft ASRS 2 Climate-related Financial Disclosures.

– Draft ASRS 101 References in Australian Sustainability Reporting Standards.

At their June 2024 Board Meeting, the AASB considered stakeholder feedback received on the draft ASRS 1.  The Board decided to prepare a non-mandatory (‘voluntary’) ASRS 1 that would cover sustainability-related financial disclosures rather than limit ASRS 1 to climate-related risks and opportunities as a mandatory Standard – the voluntary Standard ASRS 1 would have the same scope as IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. The Board will prepare a mandatory ASRS 2 that would incorporate the necessary content presented in [draft] ASRS 1 to make ASRS 2 function as a standalone, climate-only Standard and will align ASRS 2 with the baseline of IFRS S2 Climate-related Disclosures without modification with respect to specific aspects of the draft ASRS 2.