Section 5270Part 5

Pressure to Breach the Fundamental Principles

Introduction

5270.1 Sustainability assurance providers are required to comply with the fundamental principles and apply the conceptual framework set out in Section 5120Section 5120 to identify, evaluate and address threats. 5270.2 Pressure exerted on, or by, a sustainability assurance provider might create an intimidation or other threat to compliance with one or more of the fundamental principles.

This section sets out specific requirements and application material relevant to applying the conceptual framework in such circumstances.

Requirements and Application Material

General

R5270.3

A sustainability assurance provider shall not:

(a)

Allow pressure from others to result in a breach of compliance with the fundamental principles; or

(b)

Place pressure on others that the practitioner knows, or has reason to believe, would result in the other individuals breaching the fundamental principles. 5270.3 A1 A sustainability assurance provider might face pressure that creates threats to compliance with the fundamental principles, for example an intimidation threat, when undertaking a professional activity for a sustainability assurance client. Pressure might be explicit or implicit and might come from: • The sustainability assurance client. • Within the firm, for example, from a colleague or superior. • Another external organization or individual such as a supplier, customer or lender of the sustainability assurance client or of the firm. • Internal or external targets and expectations. 5270.3 A2 Examples of pressure that might result in threats to compliance with the fundamental principles include: • Pressure related to conflicts of interest: o Pressure from a family member bidding to act as a counterparty to a transaction involving a sustainability assurance client to select the family member over other counterparties. See also Section 5310Section 5310, Conflicts of Interest. • Pressure to act without sufficient expertise or due care: o Pressure from a sustainability assurance client to express an opinion on sustainability information that is not supported by the evidence obtained from the assurance procedures performed. o Pressure from a sustainability assurance client to inappropriately alter the scope of the sustainability assurance engagement to influence how the client’s sustainability goals or practices are perceived. o Pressure from a sustainability assurance client to deviate from the recommended approach when setting the scope of a voluntary sustainability assurance engagement. o Pressure from a sustainability assurance client not to inquire about strategy-related assumptions used in the forward-looking information prepared by the client and subject to assurance procedures. o Pressure from superiors to inappropriately reduce the extent of work performed. o Pressure from superiors to perform a task without sufficient skills or training or within unrealistic deadlines. • Pressure related to inducements: o Pressure from colleagues to accept a bribe or other inducement, for example to accept inappropriate gifts or entertainment from potential or existing sustainability assurance clients.

See also Section 5340Section 5340, Inducements, Including

Gifts and Hospitality. • Pressure related to non-compliance with laws and regulations: o Pressure to overlook potential breaches of environmental or safety regulations applicable to a sustainability assurance client. • Pressure related to level of fees: o Pressure exerted by a superior or a colleague of a sustainability assurance provider to provide professional services at a fee level that does not allow for sufficient and appropriate resources (including human, technological and intellectual resources) to perform the services in accordance with technical and professional standards.

See also Section 5330Section 5330, Fees and Other Types of

Remuneration

5270.3 A3 Factors that are relevant in evaluating the level of threats created by pressure include: • The intent of the individual who is exerting the pressure and the nature and extent of the pressure. • The application of laws, regulations, and professional standards to the circumstances. • The culture and leadership of the firm including the extent to which they reflect or emphasize the importance of ethical behavior and the expectation that personnel will act ethically. For example, a corporate culture that tolerates unethical behavior might increase the likelihood that the pressure would result in a threat to compliance with the fundamental principles. • Policies and procedures, if any, that the firm has established, such as ethics or human resources policies that address pressure. 5270.3 A4 Discussing the circumstances creating the pressure and consulting with others about those circumstances might assist the sustainability assurance provider to evaluate the level of the threat. Such discussion and consultation, which requires being alert to the principle of confidentiality, might include: • Discussing the matter with the individual who is exerting the pressure to seek to resolve it. • Discussing the matter with the practitioner’s superior, if the superior is not the individual exerting the pressure. • Escalating the matter within the firm, including when appropriate, explaining any consequential risks to the firm, for example with: o Higher levels of management. o Internal or external auditors. o Those charged with governance. • Disclosing the matter in line with the firm’s policies, including ethics and whistleblowing policies, • using any established mechanism, such as a confidential ethics hotline. • Consulting with: o A colleague, superior, human resources personnel, or another sustainability assurance provider; o Institute or industry associations; or o Legal counsel. 5270.3 A5 An example of an action that might eliminate threats created by pressure is the sustainability assurance provider’s request for a restructure of, or segregation of, certain responsibilities and duties relating to the professional services performed for a sustainability assurance client so that the practitioner is no longer involved with the individual or entity exerting the pressure.

Documentation

5270.4 A1 The sustainability assurance provider is encouraged to document: • The facts. • The communications and parties with whom these matters were discussed. • The courses of action considered. • How the matter was addressed.