FRC sets out plans for UK sustainability assurance standard

The Financial Reporting Council (FRC) has opened consultation on a proposed UK version of a new global sustainability assurance standard, aiming to give local assurance providers a clearer framework as demand for ESG reporting continues to grow.

The draft standard – ISSA (UK) 5000 – mirrors the recently finalised International Standard on Sustainability Assurance (ISSA) 5000, developed by the International Auditing and Assurance Standards Board (IAASB), and is intended for use on a voluntary basis by UK firms.

If adopted, it would apply to assurance engagements covering sustainability information for reporting periods beginning on or after 15 December 2026.

The FRC has kept proposed changes minimal. In fact, only one UK-specific modification is planned: the inclusion of a safeguard to prevent internal auditors from directly assisting in sustainability assurance engagements.

This prohibition already exists in UK audit standards for financial statements and has now been extended to mirror the same level of independence.

Mark Babington, the FRC’s Executive Director of Regulatory Standards, said:

“As sustainability assurance matures, it is important that the UK establishes a consistent sustainability assurance framework that underpins investor confidence in UK sustainability reporting.

The proposed adoption of this standard demonstrates the FRC’s continued commitment to internationally consistent audit and assurance frameworks, while allowing flexibility through voluntary use.”

The FRC says the move is designed to ensure that assurance providers operating across multiple jurisdictions face fewer compliance hurdles, while also encouraging a more consistent approach within the UK market.

The standard is “profession-agnostic”, meaning both professional accountants and non-accountant assurance practitioners may use it, provided they meet quality and ethical benchmarks.

There are no immediate plans to expand the UK Ethical Standard to include sustainability assurance engagements within its scope, but the FRC said it would “continue to monitor” whether such a move is warranted in the future.

The Institute of Chartered Accountants in England and Wales (ICAEW), which has previously backed efforts to build globally aligned sustainability reporting and assurance standards, welcomed the consultation.

Nigel Sleigh-Johnson, ICAEW’s Director of Audit and Corporate Reporting, commented:

“We strongly support alignment with international reporting and assurance standards, and are strongly supportive of ISSA 5000.

We are pleased to see the proposals for UK adoption include minimal amendments, supporting the drive for a widely applied, internationally recognised assurance standard, avoiding unnecessary fragmentation.”

The FRC’s own sustainability assurance market review – published last year – found widespread stakeholder support for a standardised and internationally consistent approach.

Despite its non-mandatory status, the regulator argues that a UK-branded version will promote broader adoption and ease of use across domestic engagements.

The FRC also maintains that the move will not impose additional costs on UK businesses:

“Assurance practitioners can already use the international version of the standard, and there should be no additional costs to use the UK version as we are not proposing any additional requirements.”

The consultation remains open until 31 July 2025. Submissions can be made via email to AAT@frc.org.uk.