Global corporate accounting watchdog proposes new ethics code to stamp out greenwashing

The Board, headquartered in the US and operating globally, has today (29 January) set out new drafts for the proposed standards as part of its consultation process.

In a nutshell, the standards intend to clarify the expected behaviours of all sustainability assurance practitioners in terms of the quality, depth and accuracy of the information they assess.

This should help to mitigate greenwashing in sustainability reporting, as it becomes increasingly embedded in financial reporting at many firms and as nations introduce new ESG disclosure mandates.

IESBA chair Gabriela Figueiredo Dias said: “These proposed standards will serve as a cornerstone of ethical behaviour with far-reaching benefits.

“From investors looking for transparent and credible information, to consumers wanting to ensure the reliability of companies’ narratives about the sustainable credentials of their products and practices, and companies wanting to be trusted, all users of sustainability disclosures have a vested interest in ensuring ethical choices by the preparers and assurers of such information.”

The standards are designed to apply to assurance practitioners of all backgrounds and all seniority levels. They include measures to assess whether practitioners have the necessary skills and objectivity to complete specific projects, thus identifying potential opportunities for upskilling.

Consultations on the new standards will run until 30 April. In tandem with the consultation process, IESBA will encourage national accreditation bodies across the world to start implementing the proposed standards when authorizing corporate sustainability disclosure assurance projects.

The news from IESBA 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 selling in the EU 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. Claims in the firing line include ‘eco-friendly’, ‘environmentally friendly’, ‘natural’, ‘recycled’, ‘carbon-neutral’ and ‘biodegradable.

Changes are set to come into force from early 2026.

Related feature for edie members: What sustainability disclosure mandate changes are on the horizon for businesses in the UK and EU?

Related free-to-download report: The Sustainability Communications and Disclosure Handbook

Related free-to-download report: The EU Corporate Sustainability Reporting Directive explained