As businesses, lenders, investors, and regulators place increasing emphasis on Environmental, Social and Governance (ESG) matters, sustainability information is becoming an important part of business reporting. What began as a corporate reporting trend is gradually extending into supply chains and privately owned businesses, including many small and medium-sized enterprises (SMEs).
A significant development in the audit profession
In 2026, the Independent Regulatory Board for Auditors (IRBA) adopted the International Standard on Sustainability Assurance (ISSA) 5000 for use in South Africa. ISSA 5000 establishes a global framework for providing assurance over sustainability-related information, much like existing auditing standards provide assurance over financial statements.
The standard was developed by the International Auditing and Assurance Standards Board (IAASB) to improve consistency, credibility, and public trust in sustainability reporting across industries and jurisdictions.
Why should SMES care?
Many SME owners assume that ESG initiatives have little relevance to their businesses. Larger companies increasingly require suppliers and service providers to demonstrate responsible business practices. Banks, private equity investors, and corporate customers are also becoming more interested in how businesses manage risks beyond the financial statements.
These may include:
- Energy and water usage;
- Employee wellbeing and labour practices;
- Data security and cybersecurity controls;
- Corporate governance and ethical conduct;
- Community engagement and social impact initiatives;
- Compliance and risk management processes.
As a result, businesses may soon find themselves asked to provide information that extends well beyond traditional financial reporting.
The audit perspective
From an assurance perspective, the challenge is not simply collecting sustainability information. The real challenge is ensuring that the information is accurate, complete, and supported by reliable records.
The same principles that apply to financial reporting also apply to sustainability information:
- Information should be supported by evidence;
- Measurement methods should be consistent;
- Internal controls should be documented;
- Data should be capable of independent verification.
Businesses that establish these processes early will be far better positioned should lenders, customers, investors, or regulators require independent assurance in the future.
Opportunity rather than compliance burden
While some organisations may view these developments as another layer of compliance, forward-thinking businesses may find strategic benefits.
Good governance, reliable recordkeeping, and transparent reporting are increasingly viewed as indicators of a well-managed organisation. Businesses that can demonstrate these qualities often enjoy stronger relationships with financiers, investors, and major customers. For SMEs, the focus should not be on producing lengthy sustainability reports. Instead, it should be on improving the quality, consistency, and reliability of non-financial information already being generated within the business.
Looking ahead
The auditing profession is evolving beyond the traditional audit of financial statements. Stakeholders increasingly want assurance over a wider range of information that influences decision-making, from sustainability performance to governance practices and operational resilience.
Although mandatory sustainability reporting requirements remain focused primarily on larger organisations, the expectations of the broader market are changing. SMEs that begin building sound governance and reporting practices today are likely to be better positioned for tomorrow’s business environment.
Ultimately, sustainability reporting is not merely about environmental initiatives. It is about providing stakeholders with trustworthy information regarding how a business is managed, how risks are addressed, and how long-term value is created.
If you have any enquiries, please do not hesitate to contact JC Laubscher of Broodryk Kotzé Inc at jc@bkaudit.co.za.
Source Reference:
- International Auditing and Assurance Standards Board (IAASB) – ISSA 5000 Adoption and Implementation
https://www.iaasb.org/consultations-projects/issa-5000-adoption-and-implementation - South African Accounting Academy – IRBA Adopts ISSA 5000 re Sustainability Assurance
https://accountingacademy.co.za/news/read/irba-adopts-issa-5000-re-sustainability-assurance - IRBA – Sustainability Assurance Developments
IRBA website