Understanding ESMA's Response
January 29, 2024
The European Securities and Markets Authority (ESMA) recently responded to the International Auditing and Assurance Standards Board's (IAASB) proposed International Standard on Sustainability Assurance (ISSA) 5000. This response is pivotal in shaping the future of sustainability assurance practices.
ESMA's feedback on the proposed ISSA 5000 standard reflects its commitment to enhancing investor protection and promoting stable, well-functioning financial markets in the EU. Key concerns raised include the need for clear differentiation between limited and reasonable assurance, the importance of consistency between sustainability and financial information, and the necessity of effective communication among assurance providers.
ESMA's response is comprehensive, addressing various aspects of the proposed standard. It emphasizes the need for a profession-agnostic, stand-alone standard that is applicable across all reporting frameworks. ESMA also highlights the importance of clear communication requirements, especially in the context of sustainability reporting, which often involves complex and diverse data.
Other stakeholders, including professional organizations and regulatory bodies, have also provided feedback on the proposed ISSA 5000 standard. Common themes include the need for clarity in assurance practices and the importance of a global standard that accommodates different reporting frameworks. However, ESMA's response is unique in its emphasis on investor protection and market stability.
ESMA's feedback could significantly influence the final form of the ISSA 5000 standard. The emphasis on clear communication, consistency, and a comprehensive approach may lead to more robust sustainability assurance practices, impacting companies, auditors, investors, and other stakeholders.
ESMA's response to the proposed ISSA 5000 standard is a crucial step in shaping the future of sustainability assurance. Its emphasis on clarity, consistency, and comprehensive coverage reflects the growing importance of sustainability reporting in the financial world.
1- What is ESMA's response to IAASB's proposed ISSA 5000 standard? ESMA's response to the IAASB's proposed ISSA 5000 standard includes recommendations for enhancing clarity, consistency, and comprehensive coverage in sustainability assurance practices.
2- What are the key concerns raised by ESMA regarding the proposed standard? Key concerns include the need for clear differentiation between limited and reasonable assurance, ensuring consistency between sustainability and financial information, and effective communication among assurance providers.
3- How does ESMA's feedback compare to other stakeholder responses? While there are common themes like the need for clarity and a global standard, ESMA uniquely focuses on investor protection and market stability.
4- What are the potential implications of ESMA's response for sustainability assurance practices? ESMA's response could lead to more robust sustainability assurance practices, impacting companies, auditors, investors, and other stakeholders in the financial market.
