Hong Kong has affirmed its regional and global leadership in sustainable finance, green innovation, and ESG services. Beyond its well-developed financial services sector and advanced capital markets infrastructure, one of Hong Kong’s greatest strengths lies in the readiness of its accountancy profession to meet investors’ and other stakeholders’ needs for trustworthy information and advice, and its adherence to rigorous, internationally-aligned standards.
In this regard, the HKICPA’s vision and leadership deserve recognition for placing sustainability at the core of its strategy – an approach that has recently translated into another major milestone: Hong Kong is among the first jurisdictions to adopt the international ethics standards for sustainability.
Despite the ongoing global debate on the benefits and costs of building sustainable economies, a focus on sustainability is becoming the new normal for business. It is therefore essential that trust in sustainability information keeps pace with this transition.
Building such trust is no easy task. We are still in the early years of a global, long-term effort towards building capabilities and capacity. With sustainability information being complex and forward-looking, and often based on subjective judgements, there is an increased risk of bias and manipulation, making ethical standards and guidance indispensable. Ethics helps professionals identify and address threats to their integrity, objectivity, professional competence, and independence, thereby enhancing the quality and reliability of the information they prepare or assure.
In January, the International Ethics Standards Board for Accountants (IESBA) issued a comprehensive set of global ethics standards for sustainability, encompassing: The International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA); enhanced ethical provisions for sustainability reporting; and a new standard on Using the Work of an External Expert.
These standards were developed in coordination, and jointly launched, with the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Sustainability Assurance (ISSA) 5000. By adopting the IESBA’s standards in October, the HKICPA has taken an important step to ensure a consistent ethical foundation for sustainability reporting and assurance at a critical time.
Standards tailored to professionals’ needs
Recognizing the public interest in trustworthy sustainability information, the IESBA holds that sustainability reporting and assurance must be underpinned by the same high standards of ethical behaviour and independence that apply to financial reporting and audit.
By building on the robust principles of the existing IESBA Code, the IESBA has delivered a framework that can be confidently accepted and applied worldwide – while minimizing the learning curve for those already familiar with global ethics and independence standards for financial reporting and assurance.
At the same time, the standards reflect the distinctive nature of sustainability assurance engagements, ensuring their practical relevance. This is evident in the use of appropriate terminology and illustrative examples that make the standards easier to apply, as well as in provisions addressing real-world challenges practitioners may face, such as when determining to use the work of other practitioners and external experts in specialized sustainability fields (e.g. emissions measurement), or when assurance work needs to be performed on information drawn from the entity’s value chain.
Scalability and proportionality are intrinsic to the ethics framework. In particular, the value-chain provisions take a less stringent approach to independence with respect to assurance of information from the client’s value chain compared to information that lies within its operational boundary. Other examples of scalability and proportionality include differentiated provisions for public-interest entities compared with other entities, and limiting the application of the International Independence Standards in the IESSA to sustainability assurance engagements with the same level of public interest as audits of financial statements.
Unprecedented implementation support
The HKICPA’s globally-aligned Sustainability Ethics Standards will become effective in December 2026, with the independence provisions applicable to assurance at a value-chain component taking effect in July 2028 – allowing more time for implementation with respect to the newer area of assurance of value-chain information.
Preparers and assurance practitioners will not be left to navigate implementation alone. The IESBA has made it a strategic priority to slow down new standard-setting and focus on supporting global adoption and implementation of recently issued standards, including the Sustainability Standards.
This unprecedented support programme includes, among others:
- Practical tools such as Q&As, technical overviews, and other explanatory materials to promote consistent application.
- Close coordination with the IAASB, IFAC, ISSB, IOSCO, UNCTAD, and others to strengthen capacity across jurisdictions.
- Enhanced stakeholder engagement to identify implementation challenges and provide timely support, including through an advisory group of experts called IESSA Implementation Monitoring Advisory Group.
The IESBA remains determined to contribute to the development of sustainable and resilient financial markets and economies – foundations that can only thrive when underpinned by clear, consistent, and effective ethical conduct.
