Sustainability - Professional Ethics

Why are ethics important in sustainability?

Professional ethics and independence are the foundation of trust in preparing, presenting, and assuring financial information.

They are equally important for non-financial information such as sustainability disclosures which are more subjective and future oriented.

What are the ethical standards for sustainability?

Currently, there are no specific ethical standards for sustainability reporting and sustainability assurance. The CPA Code of Professional Conduct (“CPA Code”) applies to all CPAs no matter what professional services they offer.  For example, CPAs providing sustainability assurance services would apply the existing independence rules for assurance engagements along with the fundamental principles.

On the international stage, the International Ethics Standards Board for Accountants (“IESBA”) has issued two exposure drafts. One of which is the Proposed International Standards for Sustainability Assurance (“IESSA”). The effective date of the final standards is expected to be December 2024. Go to “Learn more – Proposed IESSA” section below for more information.

What is greenwashing and what are the ethical obligations of a CPA?

Greenwashing usually refers to the intentional practice of publishing misleading sustainability information which often gives users a false impression about how well an organization, or an investment is doing in relation to its sustainability goals. 

The fundamental principles are the guiding principles within the CPA Code of Professional Conduct (“CPA Code”). The fundamental principle of objectivity requires CPAs to remain objective and not be influenced by bias or others. The CPA Code also addresses issues around false and misleading information under Rule 205 which requires CPAs to not associate with false or misleading information.

Proposed Ethics Standards for Sustainability Assurance (IESSA)

The International Ethics Standards Board for Accountants’ (“IESBA”) issued two new exposure drafts (“EDs”) to establish the first comprehensive suite of global standards on ethical considerations in sustainability reporting and assurance:
The proposed standards set forth a framework of expected behaviours and ethics provisions for use by all sustainability practitioners with the aim to foster greater trust and confidence in  sustainability information.