IESBA publishes its sustainability standards

In January 2025, the International Ethics Standards Board for Accountants (IESBA) published its Global Ethics Sustainability Standards, which includes the International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and other revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (“the Code”) relating to sustainability assurance and reporting, as well as a new standard on using the work of an external expert.

The provisions in both standards (Global Ethics Sustainability Standards and using the work of an external expert) become effective in the IESBA Code as of 15 December 2026.  

We await the Financial Reporting Council’s (FRC) decision as to how the IESSA related provisions will be dealt with in relation to its Ethical Standard. In addition, our ICAS Code of Ethics is substantively based on the IESBA Code of Ethics and so the provisions will also be incorporated into our Code in a future update. Further information will be provided in due course.

Find out more about the using the work of an external expert revisions to the Code here.

International Ethics Standards for Sustainability Assurance (IESSA) and other revisions to the Code relating to sustainability assurance and reporting

There’s been a huge rise in demand for sustainability information in recent years. In response to public concern about greenwashing and other unethical behaviour in relation to sustainability disclosures, the IESBA has developed this standard which includes additions and revisions to the IESBA Code relating to sustainability assurance and reporting, with the aim of ensuring that the sustainability information that is being disclosed can be trusted by stakeholders.

International Ethics Standards for Sustainability Assurance (IESSA)

Profession agnostic

Many different types of practitioners currently perform sustainability assurance engagements, not just Professional Accountants (PAs). The IESBA has therefore developed a new Part 5 to the Code - The International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) - which provides ethics and independence standards for use and implementation by all Sustainability Assurance Practitioners (SAPs), including those who are not PAs. This new standalone Part 5 means that all the provisions in the Code in relation to sustainability assurance can be found in the one place.

As the IESBA states in its opening paragraph to Part 5: “It is in the public interest that sustainability assurance practitioners act ethically in order to maintain public trust and confidence in sustainability information that is subject to assurance. High-quality ethics and independence standards alongside other high-quality globally accepted reporting and assurance standards will help users of sustainability information such as investors, customers, employees, suppliers, regulators and governments to confidently rely on such information in their decision-making.”

Equivalent to standards for audit

The new IESSA is substantially based on the existing IESBA Code of Ethics, so much of the format will be familiar for PAs. It applies to all sustainability assurance engagements (SAEs), and any other professional services provided by the SAP to the same sustainability assurance client, and to both limited and reasonable assurance engagements on sustainability information.

It's equivalent to the ethics and independence standards for audit engagements. There are no new prohibitions, but it has been tailored to address specific sustainability related issues, and to include sustainability related examples.  

For example, there’s a new definition of sustainability information and new provisions in relation to group sustainability assurance engagements and value chain components and using the work of another practitioner.

Section 5270 ‘Pressure to Breach the Fundamental Principles’ addresses when there’s pressure to behave unethically, including pressure from the entity to meet sustainability goals.  

Section 5360 ‘Responding to Non-Compliance with Laws and Regulations’ (NOCLAR) covers when the SAP becomes aware, or suspects, non-compliance with laws and regulations. Sustainability related examples are included in a list of examples of laws within the section. The NOCLAR provisions are only in relation to the sustainability assurance client, or those working for, or under the direction of, the client. SAPs are not required to apply the provisions to an entity in the client’s value chain. Nevertheless, the IESBA also does not support SAPs turning a blind eye and it’s recognised in the Code that the provisions might also be helpful in terms of a NOCLAR situation in the client’s value chain. 

Framework neutral

The IESSA has also been designed to be framework neutral which means it can be used with any reporting or assurance framework, including the IFRS Sustainability Disclosure Standards, the European Sustainability Reporting Standards (ESRS), and Global Reporting Initiative (GRI).

IESSA – International Independence Standards

The International Independence Standards (IIS) in Part 5 only apply to SAEs where the sustainability information on which the SAP is expressing an opinion is: (a) reported in accordance with a general-purpose framework, and (b) required by law and regulation, or publicly disclosed to support the decision making of investors and other users. For SAEs which do not fall into this category, professional accountants must apply Part 4B of the IESBA Code.

Value chain components

Particular provisions have been included in Sections 5405 and 5406 in relation to when assurance work is performed at a value chain component. These provisions do not become effective until July 2028 with transitional provisions being specified for the intervening period. 

Fees

When a firm performs both the audit engagement and the SAE for a client in accordance with the IESSA, the IESBA has accepted that there’s no self-interest threat to the auditor’s independence from the level of the SAE fee as the same independence requirements apply to both engagements.  However, if the SAE is carried out under Part 4B of the Code, there could be a threat to auditor independence from the level of fees from the SAE and this would need to be evaluated and addressed. The IESBA reaffirmed its view that the disclosure of fees for the audit of the financial statements, separate from other fees, serves as a guardrail to auditor independence.

IESBA Code of Ethics - Parts 1 to 3

In addition, the IESBA has also revised Parts 1 to 3 of the Code to address the ethics issues that might arise for PAs involved in sustainability reporting, including the addition of sustainability references where applicable and sustainability related examples. There are not substantive changes to Parts 1 to 3 as the IESBA believes the Code already contains robust provisions however the IESBA wanted the Code to be fit for purpose in terms of sustainability. The revisions are mostly in Section 220 ‘Preparation and Presentation of Information’ and Section 270 ‘Pressure to Breach the Fundamental Principles’.  

Find out more about the ethics resources ICAS provides to support its members here:

Ethics