Sustainability

Sustainability

The sustainability regulatory environment is rapidly evolving, driven by the increased demand from investors, those charged with governance, the public and other stakeholders for sustainability and ESG reporting and assurance. Standard-setters globally and across various jurisdictions are working to develop sustainability reporting and assurance standards to address concerns about the current lack of standardisation and complexity of multiple frameworks. The IESBA is working to develop profession agnostic ethical and independence standards for sustainability.

APESB is continuing to monitor developments in sustainability and ESG reporting, particularly from the international standard setters (ISSB, IESBA, IAASB) and local standard setters (AUASB and AASB).

Sustainability Ethics and Independence Standards

International Ethics Standards Board for Accountants (IESBA)

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.

Comments can be provided to the IESBA on the Use of External Experts ED by 30 April 2024, and on the Sustainability ED by 10 May 2024.

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

Treasury consultations on Climate-Related Financial Disclosure

APESB's Submissions

The Treasury of Australia have conducted two consultations on climate-related financial disclosure in Australia, and have recently released a third consultation.

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 is 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.  The consultation is open until 9 February 2024.

Global developments in Ethics and Assurance for Sustainability

APESB and CPA Australia Event - March 2023

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)

Sustainability Assurance Standards

International Auditing and Assurance Standards Board

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.

International Sustainability Disclosure Standards

International Sustainability Standards Board (ISSB)

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.

Australian Sustainability Reporting Standards

Australian Accounting Standards Board

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

ED SR1 is open for public comments until 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.

 

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