TLDR: Global Watchdog Proposes Business Reporting Code to Combat Greenwashing

The International Ethics Standards Board for Accountants (IESBA) is developing new global standards for sustainability reporting, with a specific focus on overcoming greenwashing and building stakeholder trust.

The IESBA has set out new drafts for the proposed standards as part of its consultation process. The standards aim to clarify the expected behaviors of sustainability assurance practitioners to mitigate greenwashing in sustainability reporting. The standards are designed to apply to assurance practitioners of all backgrounds and seniority levels.

The IESBA is encouraging national accreditation bodies to implement the proposed standards. The announcement comes shortly after the European Parliament backed a directive to ban businesses from making misleading or hard-to-understand green claims. The directive prohibits vague claims about the environmental impact of products or services unless they can be backed up with evidence.

Key Points:

• The International Ethics Standards Board for Accountants is developing global standards for sustainability reporting
• The standards aim to combat greenwashing and build stakeholder trust
• The proposed standards clarify the expected behaviors of sustainability assurance practitioners
• The IESBA is encouraging national accreditation bodies to implement the proposed standards
• The European Parliament has backed a directive to ban misleading green claims

Article Summary:

The International Ethics Standards Board for Accountants (IESBA) is developing new global standards for sustainability reporting with a focus on overcoming greenwashing and building stakeholder trust. The proposed standards aim to clarify the expected behaviors of all sustainability assurance practitioners in terms of the quality, depth, and accuracy of the information they assess. This will help to mitigate greenwashing in sustainability reporting as it becomes more embedded in financial reporting and as nations introduce new ESG disclosure mandates. The IESBA has encouraged national accreditation bodies across the world to implement the proposed standards when authorizing corporate sustainability disclosure assurance projects. The announcement comes shortly after the European Parliament backed a new directive to ban businesses from making misleading or hard-to-understand green claims aimed at consumers. Under the directive, businesses will not be permitted to make vague claims about the environmental impact of their products or services unless they can be backed up with evidence. These changes are set to come into force from early 2026.