Chapter 1 – International Ethics Standards for Sustainability Assurance (Including International Independence Standards)

This chapter establishes Part 5 of the Code, which sets out ethics and independence standards for sustainability assurance practitioners. The standards are designed to maintain public trust and confidence in sustainability information. Practitioners are expected to have the relevant skills, knowledge, and experience to perform these engagements. Part 5 comprises Sections 5100 to 5390, covering general ethics standards, and Sections 5400 to 5600, which establish independence standards for engagements within the scope of the International Independence Standards.

Five fundamental principles are defined: Integrity, Objectivity, Professional Competence and Due Care, Confidentiality, and Professional Behaviour. Integrity requires being straightforward and honest in all professional and business relationships. Objectivity requires practitioners to exercise judgment without being compromised by bias, conflict of interest, or undue influence. Professional Competence and Due Care involves maintaining professional knowledge at the level required for competent service. Confidentiality involves respecting information acquired through professional relationships, and Professional Behaviour requires compliance with relevant laws and acting in the public interest.

A conceptual framework is introduced to identify, evaluate, and address threats to these principles. Threats fall into five categories: self-interest, self-review, advocacy, familiarity, and intimidation. If identified threats are not at an acceptable level, the practitioner must address them by eliminating the circumstances creating the threats, applying safeguards, or declining the engagement. The framework requires practitioners to have an inquiring mind, exercise professional judgment, and apply the reasonable and informed third party test.

Section 5360 provides guidance on responding to non-compliance with laws and regulations (NOCLAR). If a practitioner becomes aware of non-compliance by a client, management, or those charged with governance, they must alert management to enable rectification or deterrence. In group situations, matters must be communicated to the group engagement leader. Section 5380 dictates that practitioners providing tax planning services must ensure there is a credible basis in laws and regulations for any recommended arrangement.

Independence standards in Section 5400 are required for both reasonable and limited assurance engagements. Independence comprises independence of mind and independence in appearance. Firms are prohibited from assuming management responsibilities, such as setting sustainability policies or authorizing transactions. For public interest entities (PIEs), specific fee-related safeguards apply. If total fees from a PIE client represent more than 15% of the firm’s total fees for two consecutive years, a pre-issuance review is required. For non-PIE clients, a review is required if fees exceed 30% for five consecutive years. Section 5540 sets a seven-year maximum “time-on” period for key sustainability assurance leaders at PIE clients, followed by a cooling-off period of up to five years.

Chapter 2 – Revised glossary

The glossary has been updated to include and refine terms relevant to sustainability assurance. Key additions include definitions for “another practitioner,” “sustainability assurance client,” “sustainability assurance engagement,” “sustainability assurance practitioner,” and “sustainability information.” These definitions ensure consistency in the application of the Code across different types of assurance services and clarify the reporting boundaries, including the inclusion of value chain components.

Chapter 3 – Consequential and conforming amendments to international code of ethics for professional accountants (Including International Independence Standards)

Amendments have been made to the existing Code to ensure alignment with the new Part 5. These include updating Section 100 on breaches and Section 120 on the conceptual framework to reference the sustainability-specific provisions. The goal is to create a seamless ethical framework that applies whether a professional is performing an audit of financial statements or a sustainability assurance engagement.

Chapter 4 – Sustainability reporting-related revisions to parts 1 to 3 of international code of ethics for professional accountants (Including International Independence Standards)

This chapter revises standards for professional accountants in business and public practice when they are preparing or presenting sustainability information. Accountants are prohibited from preparing information in a manner intended to mislead others, which includes “greenwashing” practices such as omitting relevant information to misrepresent impacts or placing excessive emphasis on specific data while understating others. The revisions emphasize that these ethical obligations apply to all levels of an organisation involved in the preparation and presentation of financial and sustainability reports.

Effective date

The provisions in Chapters 1 to 3 are generally effective for sustainability assurance engagements on sustainability information for periods beginning on or after December 15, 2026. The revisions in Chapter 4 are also effective from December 15, 2026. However, provisions in Sections 5405 and 5406 specifically applicable to assurance work performed at value chain components have a deferred effective date of July 1, 2028. Early adoption of all provisions is permitted and encouraged. Transitional provisions allow firms to continue certain non-assurance service engagements entered into before the effective date for no more than one reporting cycle.