Report on International Work to Develop a Global Assurance Framework for Sustainability-related Corporate Reporting

According to a recently released report also describing work on assurance and ethics, the International Organization of Securities Commissions’ (IOSCO) efforts in this subject area (including independence) standards over sustainability-related corporate reporting has been led by a dedicated workstream under its Sustainable Finance Taskforce (STF).

Overall, sys the report, “stakeholders have expressed strong support for IOSCO to play a key role in coordinating and promoting global consistency in the assurance of sustainability-related information. They have encouraged further engagement and capacity building across the ecosystem. In this report, we often use the term a ‘global assurance framework’ to refer jointly to the assurance and ethics (including independence) standards for sustainability-related corporate reporting.”

From its fact-finding and engagement with stakeholders across the ecosystem, IOSCO has noted several features of the assurance landscape today. Currently, some issuers voluntarily seek independent assurance over sustainability-related reporting, often for a subset of information, such as greenhouse gas (GHG) emissions or reporting under the Taskforce on Climate-related Financial Disclosures’ (TCFD) recommendations. Larger issuers are more likely to seek assurance on their sustainability-related reporting and this is most often limited assurance.

The introduction to the report says that independent assurance may be provided by either audit firm or non-audit firm assurance providers. “This report refers to ‘audit firms’ as the Global Public Policy Committee (GPPC) member accounting firms (Deloitte, EY, PwC, KPMG, Grant Thornton and BDO) and other professional accountants; and refers to ‘non-audit firm assurance providers’ as others such as ISO Certified providers, specialist firms, consultancy firms etc. that do not provide audit services over financial statements, and other non-professional accountants. Non-audit firm assurance providers are often engaged to assure more specialized information, such as sustainability-related metrics. Different standards are also used. For example, the International Standard on Assurance Engagements (ISAE) 3000 (Revised) is typically used for assurance engagements on general purpose sustainability-related reporting, while others, such as International Organization of Standardization (ISO) 14064-3, are used by some non-audit firm assurance providers for assurance over more targeted information.”

The regulatory landscape today is mixed, the report says. “Some jurisdictions have indicated an intention to consider voluntary or mandatory assurance over sustainability-related information in future, while others have set requirements for limited assurance on (at least some) sustainabilityrelated information (e.g., New Zealand) or indicated a gradual approach towards reasonable assurance (e.g., the European Union (EU)).

IOSCO has also observed growing demand among investors for high-quality assurance over some sustainability-related information to enhance the reliability of corporate reporting.  investors typically see reasonable assurance as the long-term target, especially in respect of metrics such as those related to GHG emissions. Many think, however, that limited assurance may be the more realistic objective in the short term. “Investors see consistent and comparable application of assurance and ethics (including independence) standards for sustainabilityrelated information as key to supporting high-quality assurance engagements.”

Responding to the needs of investors and other stakeholders, the standard setters are developing profession-agnostic standards for assurance and ethics (including independence) to support assurance over sustainability-related corporate reporting. “The emerging standards will be designed to apply across all reporting frameworks (i.e., ‘framework-neutral’), and irrespective of whether reporting is investor-focused or directed to the information needs of wider stakeholders.”

The IAASB is developing an overarching standard for assurance on sustainability-related reporting and the IESBA is developing ethics (including independence) standards to support trustworthy assurance over sustainability-related information, regardless of whether such assurance is delivered by professional accountant or non-professional accountant assurance providers.

Both the IAASB and the IESBA aim to issue exposure drafts by the end of 2023 (September 2023 for the IAASB and December 2023 for the IESBA), with a view to finalizing their standards by late 2024.

For more, visit FR04/23 Report on International Work to Develop a Global Assurance Framework for Sustainability-related Corporate Reporting (