The International Federation of Accountants (IFAC) and the Association of International Certified Professional Accountants (Association), in partnership with research and data provider Audit Analytics (AA), have released The State of Play in Reporting and Assurance of Sustainability Information: Update 2019-2020 Data & Analysis. The publication examines global practices for sustainability reporting, including the extent to which companies are obtaining external assurance over their sustainability disclosures; which standards are used as the basis for third-party assurance; and what types of firms are providing sustainability assurance services. The new report updates the IFAC/Association/AA analysis published last year. See The State of Sustainability Assurance: It Varies, July 2021 Update.
The study reviews the reporting practices of 1,400 companies from 22 jurisdictions. Key findings include:
92 percent of the companies disclose some sustainability information, a slight increase from the 91 percent that made such disclosure in 2019.
58 percent of companies that report sustainability information provide some level of third-party assurance on it, up from 51 percent in 2019.
Audit or audit-affiliated firms conducted 61 percent of these assurance engagements. This reflects a two percent decrease in the use of audit firms for ESG assurance, compared to 2019. For those companies that obtained ESG assurance from an audit firm, 71 percent used their financial statement auditor.
82 percent of all assurance engagements result in limited assurance reports, down slightly from 83 percent last year.
94 percent of assurance engagements employing an audit firm used the International Standard on Assurance Engagements 3000 (Revised), up from 88 percent in 2019. Other assurance service providers relied on a variety of assurance standards.
80 percent of companies reported using more than one ESG disclosure framework or set of standards. The most frequently used frameworks/standards were the UN’s Sustainable Development Goals (76 percent) and the Global Reporting Initiative (GRI) (72 percent). While only 38 percent of these 1,400 companies used the Sustainability Accounting Standards Board standards, SASB use increased the most – by 153 percent – compared to 2019.
The State of Play report contains detailed information concerning reporting and assurance practices in different industries and on a country-by-country basis. Audit committees might find this material of interest in benchmarking their company’s approach to ESG disclosure and assurance.