"Sustainability Disclosure Standards Should Be Institutionalized as a Single Standard"

Korean Institute of Certified Public Accountants Holds Sustainability Forum

"ISSA 5000 Demonstrates International Alignment"

With environmental, social, and governance (ESG) related sustainability disclosures set to become mandatory in stages starting in 2028, there have been calls to institutionalize ISSA 5000 as the single standard among international certification standards.

Professor Beomjun Kim of the Department of Accounting at Catholic University expressed this view during the webinar titled "Understanding International Sustainability Certification Standards and Comparative Analysis with Other Certification Standards," hosted by the Korean Institute of Certified Public Accountants at 3 p.m. on September 21.

Sustainability disclosure is a system in which companies disclose to investors the impacts of sustainability-related risks, such as climate change. Starting in 2028, sustainability disclosure within business reports will become mandatory in stages, beginning with KOSPI-listed companies with total consolidated assets of at least 10 trillion won. During the initial phase of disclosure, third-party assurance will be voluntary, but from 2030, third-party assurance will be mandatory. There are three major assurance standards: ISSA 5000 by the International Auditing and Assurance Standards Board (IAASB), ISO 14019 by the International Organization for Standardization (ISO), and AA1000AS by AccountAbility, a private non-profit organization in the UK.

At 3 p.m. on the 21st, Choi Woonyeong, Chairman of the Korean Institute of Certified Public Accountants, gave the opening remarks at the webinar titled "Understanding International Sustainability Certification Standards and Comparative Analysis with Other Certification Standards," hosted by the Korean Institute of Certified Public Accountants. Screenshot of the webinar

Professor Kim assessed that ISSA 5000 is superior to other standards in terms of its background, intended purpose, and specific guidance. ISSA 5000 was established to enhance the reliability and consistency of disclosures in capital markets and is accompanied by detailed guidelines for practical application. In contrast, ISO 14019 is used for the verification of certain technical areas, and AA1000AS is utilized to strengthen social responsibility. Also, both of these standards are written with a principle-based approach rather than addressing detailed implementation.

He further noted that interviews conducted with accounting and non-accounting firms indicated that ISSA 5000 is expected to become the mainstream standard, and international trends show the adoption of ISSA 5000. Accordingly, Professor Kim stated that in order to improve the reliability and comparability of Korea’s sustainability assurance framework, policy discussions should center on creating a certification system that is internationally aligned and consistent. He also emphasized that supplementary measures, such as detailed practical guidelines, must be discussed together. Professor Kim said, "Each assurance standard has its own unique value, and with mutual competition, ongoing revisions, and distinct roles, these standards should provide better information for users."

At 3 p.m. on the 21st, Professor Beomjun Kim of Catholic University gave a presentation at the webinar titled 'Understanding International Sustainability Certification Standards and Comparative Analysis with Other Certification Standards' hosted by the Korean Institute of Certified Public Accountants. Screenshot from the webinar

Professor Yewon Kim of Sejong University's School of Business also, after analyzing the specific differences among the three standards, said that while their fundamental principles are similar, there are differences in the level of detailed discipline that can be implemented and monitored in actual practice. Particularly from the perspective of supervisory authorities, she said ISSA 5000 is suitable as an objective basis for judging whether an assurer exercised 'reasonable duty of care' during post-disclosure review or supervision. To determine ex post whether disclosures were deficient, authorities such as the Financial Supervisory Service must use audit documentation to follow the assurance trail. They must identify whether risks have been detected, if appropriate control tests and substantive procedures have been conducted in response to these risks, if any detected errors were summarized according to materiality, and whether conclusions were drawn appropriately in light of those figures. ISSA 5000 offers several advantages, such as explicit definition of responsibility, separation of risk identification units followed by mandatory substantive procedures, preparation of misstatement aggregation summaries, and drawing conclusions according to matrix formulas, all causally linked within a single body of documentation. In contrast, other standards delegate key decision-making to external parties or lack methodological specificity. In this context, Professor Kim stated, "It is necessary to adopt assurance standards that meet the legal accountability and supervisory capabilities required by the capital markets law in an environment of statutory disclosure."

Choi Woonyeol, Chairman of the Korean Institute of Certified Public Accountants, remarked, "As sustainability information becomes a core factor in the capital markets, the reliability and consistency of assurance supporting this information have become even more important. This forum provides an opportunity to gain a precise understanding of ISSA 5000—which has been endorsed by the International Organization of Securities Commissions (IOSCO) and adopted by many major countries worldwide—and to closely examine both the similarities and differences with other assurance standards. We hope this contributes to the stable establishment of Korea’s sustainability assurance system and the enhancement of practical response capabilities."

This content was produced with the assistance of AI translation services.