With global assets in sustainability and ESG-related investment vehicles due to surpass $53 trillion by 2025, the need for reliable, neutral, and comprehensive frameworks for reporting sustainability information is evident. And policymakers and regulatory bodies have taken note. The European Union (EU) continues to negotiate terms for its Corporate Sustainability Reporting Directive. This past March, the U.S. Securities and Exchange Commission proposed new rules regarding disclosure of climate-related risks. The newly formed International Sustainability Standards Board (ISSB), which has support of the G20 and others, issued their exposure drafts for sustainability reporting for public comment. The International Organization of Securities Commissions and Financial Stability Board weighed in on climate-related disclosures as well.

As a result, we face a critical moment: the growing desire globally to develop reliable, high-quality sustainability reporting as a key element of corporate reporting is leading to new requirements and heightened expectations. This will be a journey, and some level of patience is needed. The data capture, information systems, and processes within many organizations needed to report reliably on sustainability are, understandably, in the process of maturing.

Like in the world of financial reporting, external assurance has a key role in contributing to reporting reliability. Supporting investors and regulators’ trust in the sustainability information reported is the goal. Robust assurance standards that offer a consistent approach across borders for opining on organizations’ sustainability reports should facilitate that goal.

We at the International Audit Assurance and Standards Board (IAASB) hear the need for a global assurance standards solution. The IAASB already has well-established principles-based and subject-specific standards and guidance that are being effectively applied. But we know there is further work to be done in bringing the existing standards and guidance together and supplementing them to address assurance of sustainability reporting specifically.

We’ve recently taken a big step forward; our March 2022 meeting provided our first opportunity to discuss the IAASB’s actions in responding to the urgent need for an international assurance framework for sustainability reporting. In the discussion, the IAASB heard directly from investors that the reliability of sustainability reporting is crucial for decision making. The need for urgent and effective action, which balances global consistency and flexibility to accommodate regional variations, was clear.

The IAASB is committed to leading this effort to create new “sustainability bespoke” assurance standards. We are now in the process of identifying the specific approach to building these standards that will have the greatest impact on establishing high-quality assurance to support reliable sustainability reporting. We have determined that the new sustainability assurance standards will need to be framework-agnostic and principles-based—they will need to work with all sustainability/ESG reporting frameworks. We also expect that the sustainability assurance standards will need to be developed in a phased approach. Initial actions shall focus on an overarching standard that addresses all areas of the engagement in principle, with specificity provided on key areas. Specificity across non-key areas of the assurance engagement will develop over a longer time horizon, factoring in the maturity and evolution of sustainability reporting and assurance.

We will be discussing the approach to standard-setting on sustainability assurance at our IAASB meeting next week. The IAASB is hoping to have the proposed new sustainability assurance standards ready for public comment during the second half of 2023. Moving at this speed is possible in part because the current International Standards on Assurance Engagements (ISAEs), together with the non-authoritative sustainability assurance guidance, provide a robust starting point. We also plan to leverage the principles embedded in our International Standards on Auditing (ISAs), which are already used in 130 countries, are well known throughout the marketplace, and are trusted by investors and regulators.

Building a mature reporting and assurance ecosystem for sustainability will not happen overnight. The evolution of the ISAs, for example, has been an iterative affair since the 1970s. The process will—and should—take time. Nevertheless, to make progress, we cannot let perfect be the enemy of the good. Over time, as preparers, auditors, regulators, and investors gain experience, we can expect reporting frameworks and assurance standards to become increasingly refined, just as financial standards have evolved.

To continue to make progress, all stakeholders will need to remain in close collaboration. This will enable us to move quickly and boldly where and when we can. We expect a rapid transformation to occur in this space over the next decade. From there, global sustainability standards, like global financial audit standards, will be a stable platform, and our focus will on almost certainly be on continuous improvement.

USAID (United States Agency for International Development) has joined the International Federation of Accountants (IFAC); The Global Fund to Fight AIDS, Tuberculosis and Malaria; and Gavi, the Vaccine Alliance, in signing a Memorandum of Understanding (MOU) to support in-country financial management. The agreement supports programming for local accountancy and finance professionals and efforts to improve financial transparency, accountability, and anti-corruption efforts in the public health sector.

The MOU supports continued donor collaboration, the importance of which was emphasized during the COVID-19 pandemic, and the need for accountability and transparency on the use and stewardship of funds. The partnership between IFAC, USAID, The Global Fund, and Gavi demonstrates a shared commitment to strengthening public financial management globally. Through this agreement, USAID, IFAC, the Global Fund, and Gavi seek to strengthen accountancy and financial professionals’ expertise and help close the gaps in accountancy skills in implementing countries, which can impact the reliability and effectiveness of managing and disbursing funds. The MOU builds on a 2011 agreement and aims to optimize the joint efforts of global partners to maximize the performance of investments and support the sustainability of health programs.

Ultimately, this partnership will help improve the integration of donor investments into country systems, strengthen internal controls to reduce fiduciary and financial risks, enhance absorption of grants, and produce greater impact.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

About USAID
USAID is the world's premier international development agency and a catalytic actor driving development results. USAID's work advances U.S. national security and economic prosperity, demonstrates American generosity, and promotes a path to recipient self-reliance and resilience. USAID’s global health efforts include investments in HIV, Malaria, Tuberculosis, Maternal and Child Health, Family Planning, Nutrition, other infectious diseases, and health systems strengthening. 

About Gavi, the Vaccine Alliance
Gavi, the Vaccine Alliance is a public-private partnership that helps vaccinate half the world’s children against some of the world’s deadliest diseases. Since its inception in 2000, Gavi has helped to immunise a whole generation – over 822 million children – and prevented more than 14 million deaths, helping to halve child mortality in 73 lower-income countries. Gavi also plays a key role in improving global health security by supporting health systems as well as funding global stockpiles for Ebola, cholera, meningitis and yellow fever vaccines. After two decades of progress, Gavi is now focused on protecting the next generation and reaching the unvaccinated children still being left behind, employing innovative finance and the latest technology – from drones to biometrics – to save millions more lives, prevent outbreaks before they can spread and help countries on the road to self-sufficiency. Learn more at www.gavi.org and connect with us on Facebook and Twitter.

The Vaccine Alliance brings together developing country and donor governments, the World Health Organization, UNICEF, the World Bank, the vaccine industry, technical agencies, civil society, the Bill & Melinda Gates Foundation and other private sector partners. View the full list of donor governments and other leading organizations that fund Gavi’s work here.

About the Global Fund to Fight AIDS, Tuberculosis and Malaria
The Global Fund is a worldwide movement to defeat HIV, TB and malaria and ensure a healthier, safer, more equitable future for all. We raise and invest US$4billion a year to fight the deadliest infectious diseases, challenge the injustice which fuels them and strengthen health systems in more than 100 of the hardest hit countries. We unite world leaders, communities, civil society, health workers and the private sector to find solutions that have the most impact, and we take them to scale worldwide. Since 2002, the Global Fund has saved 38 million lives.

The International Auditing and Assurance Standards Board (IAASB) is pleased to announce the reappointment of Tom Seidenstein as IAASB Chair for a further three-year term commencing July 1, 2022.

Mr. Seidenstein has chaired the IAASB since July 2019 and has been instrumental in the delivery of milestone projects, such as the new quality management standards, and addressing the issue of standards for less complex entities.

“We are delighted with Tom's reappointment as Chair of the IAASB,” said Linda de Beer, Chair of the Public Interest Oversight Board (PIOB). “He has proven himself to be an effective, strategic leader, who is focused on delivering results in the public interest.  He has the confidence of the PIOB to lead the IAASB on the next chapter of its journey to prioritize standards development in a timely manner to respond to the needs and challenges of the market.”  

The reappointment comes at a pivotal time for the IAASB. The Board has released an ambitious work plan (A Public Interest Focus in Uncertain Times) and is active and engaged on trending topics such as fraud, going concern, sustainability reporting and assurance, and technology.

“It is an honor to continue the work we’ve started at the IAASB,” said Mr. Seidenstein. “Together with a great staff and Board, we’ve delivered on our work plan commitments. We provided real help to the market during the pandemic by publishing real-time guidance to the accountancy profession. Now, as the public interest demands evolve with issues such as sustainability assurance and technological innovation, the IAASB must remain resolute in delivering globally accepted standards in a timely manner that respond to changing public interest needs. I’m excited for the next three years!”

Prior to joining the IAASB, Mr. Seidenstein has held senior strategic leadership positions at the Federal National Mortgage Association, commonly known as Fannie Mae, and the IFRS Foundation. Mr. Seidenstein has also served as a Trustee of the International Valuation Standards Council (IVSC) and on XBRL International’s Board of Advisors. He holds a Master in Public Policy from the Kennedy School of Government at Harvard University and an undergraduate degree from the School of Public and International Affairs at Princeton University.

About the IAASB

The International Auditing and Assurance Standards Board develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

At its March 2022 virtual meeting, IFAC’s Professional Accountants in Business Advisory Group considered the key global trends impacting the accountancy profession.

Countries around the world are searching for ways to shift capital investments into activities that support the transition to a more sustainable, low-carbon economy. To finance that massive change, investors and regulators are looking to the sustainable debt market as an important vehicle in raising funds to finance projects that advance environmental, social and governance (ESG) objectives.

The International Federation of Accountants (IFAC) works with our valued member organizations, network partners, and others to facilitate the translation of content, including standards and supporting materials from the standard-setting boards, IAASB, IESBA, and IPSASB, in almost 50 languages. In 2021, with the help of 36 different organizations, we developed 159 translations in 24 different languages.