Understanding the upcoming International Standard on Sustainability Assurance (ISSA) 5000

The International Auditing and Assurance Standards Board (IAASB) is developing a new standard, ISSA 5000, specifically focused on sustainability assurance. This comprehensive standard is expected to be released in late 2024 and will significantly impact businesses reporting on their sustainability efforts.

For the purposes of this proposed ISSA, sustainability information is information about sustainability matters. An entity’s disclosures about such matters may relate to several different topics (for example climate, labour practices, biodiversity) and aspects of topics (for example risks and opportunities, governance, metrics and key performance indicators). Law or regulation or sustainability reporting frameworks may describe sustainability matters, topics or aspects of topics in different ways, and may also provide guidance for the entity in determining the sustainability information to be reported.

Why should businesses care?

As environmental, social, and governance (ESG) issues gain prominence, stakeholders are increasingly demanding transparency and accountability from businesses regarding their sustainability practices. The proposed ISSA 5000 provides a standardised framework for verifying and assuring the accuracy and completeness of sustainability information reported by companies. This independent verification enhances credibility and trust among investors, regulators, and other stakeholders, potentially leading to:

• Improved access to capital: Investors increasingly consider ESG factors in their decision-making, and a credible assurance report can demonstrate a company’s commitment to sustainability, potentially attracting more investment.
• Reduced risk: Unreported or inaccurate sustainability information can expose companies to reputational and regulatory risks. ISSA 5000 helps mitigate these risks by ensuring the reported information is reliable.
• Enhanced stakeholder engagement: By demonstrating transparency and accountability through a credible assurance report, companies can foster stronger relationships with stakeholders who value sustainability.

Next steps:

While the final standard is not yet released, businesses are encouraged to act proactively by:

• Familiarising themselves with the proposed ISSA 5000 framework: The IAASB website provides information and resources, including the exposure draft of the standard, to help businesses understand its key requirements.
• Evaluating their current sustainability reporting practices: Assessing existing reporting processes and controls will help businesses identify areas that may need adjustments to comply with the new standard.
• Considering engagement with assurance providers: Businesses can start exploring potential assurance providers who have experience and expertise in applying the new standard.

By staying informed and taking these proactive steps, businesses can ensure they are prepared to adapt to the upcoming ISSA 5000 standard and leverage its potential benefits. If you want to know more about ISSA 5000 and how this can impact your business, please speak to our subject matter experts Lauren Kelly and Talha Farrukh for further details.