Green - An environmentalist community

LONDON, Jan 29 (Reuters) - Firms that check environmental, social and governance claims made by companies will be asked to follow a proposed new ethics code to help combat greenwashing, the chief of a global standards body told Reuters.

Trillions of dollars have flowed into investment funds touting green credentials, but these can be misleading, a practice known as greenwashing. As a result, companies are increasingly being asked to disclose more about their actions on climate change and other issues such as board diversity.

Companies in the European Union and globally from this year will have to use new, mandatory disclosures on ESG and climate-related factors in their annual reports for 2024 and onwards.

These disclosures will need checking by external auditors as a safeguard against greenwashing.

Gabriela Figueiredo Dias, chair of the International Ethics Standards Board for Accountants (IESBA), said it was proposing revisions and additions to its ethics standards for auditing sustainability information from companies.