Key Impact Points:
- KPMG: ISSA 5000 introduces enhanced standards for sustainability assurance, aligning it with the rigor of financial audits.
- Materiality and internal controls will face stricter scrutiny under the new standard, boosting credibility and comparability of ESG reporting.
- Effective December 15, 2026, ISSA 5000 will replace ISAE 3000 for sustainability assurance engagements in IAASB-adopting jurisdictions.
Meeting Investor Demands for High-Quality Reporting
With sustainability influencing investment decisions, ISSA 5000 is set to transform how companies approach ESG assurance. This new standard, developed by the International Auditing and Assurance Standards Board (IAASB), is tailored to sustainability engagements, ensuring data is credible and comparable.
“ISSA 5000 represents the next generation of sustainability assurance,” said Mike Shannon, Global Head of ESG Assurance, KPMG International. “The goal…is to set a high-quality international standard that strengthens public confidence in the global profession and therefore in the information being reported.”
Key Features of ISSA 5000
- Targeted Assurance: ISSA 5000 is specific to sustainability engagements, adaptable to various frameworks, and scales for reasonable and limited assurance levels.
- Rigorous Materiality Assessment: Materiality will consider both financial and impact aspects, aligning with frameworks like the European Sustainability Reporting Standards (ESRS).
- Enhanced Internal Controls: Processes and completeness of reported information will be more thoroughly reviewed.
- Third-Party Evidence: Assurance providers must evaluate and incorporate evidence from value chain entities effectively.
- Forward-Looking Data: Greater emphasis will be placed on verifying methods, assumptions, and data behind targets and plans.
Preparing for ISSA 5000
Companies should assess the impact of the standard and consult with assurance providers early.
“Producing sustainability reporting isn’t a siloed function,” said Mary Bonnici, Senior Director, Global Audit Methodology Group, KPMG International. “The impact can extend across the entire organization, including the company’s people, processes, systems, and governance.”
Bonnici advises organizations to engage assurance providers to review processes, ensuring the completeness and appropriateness of material information.
Effective Date
ISSA 5000 will apply to reporting periods starting December 15, 2026, superseding ISAE 3000. As sustainability reporting becomes more central to investment and regulatory landscapes, ISSA 5000 will ensure higher-quality, globally trusted ESG information.
Related Article: Innovation and Sustainability Go Hand in Hand: KPMG
