The International Federation of Accountants (IFAC) and the Association of International Certified Professional Accountants (Association), in partnership with research and data provider Audit Analytics, have published The State of Play in Sustainability Assurance. The report examines global practices for sustainability reporting, including the extent to which companies are obtaining 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. In their Forward to the report, IFAC CEO Kevin Dancy and Association CEO for Public Accounting Susan Coffey state: “In short, the data shows a situation that is still evolving, with significant differences in practices across different jurisdictions.”
Key findings of the State of Play report include:
91 percent of the companies reviewed report some level of sustainability information.
51 percent of companies that report sustainability information provide some level of assurance on it.
63 percent of these assurance engagements were conducted by audit or audit-affiliated firms.
88 percent of assurance engagements employing an audit firm made use of the International Standard on Assurance Engagements 3000 (Revised), while other service providers often rely on alternative assurance standards.
83 percent of all assurance engagements result in limited assurance reports.
The theme of the report is that inconsistencies between companies as to whether to obtain assurance, and inconsistencies between assurance providers and the standards they follow, undermine confidence in sustainability disclosures. “As it stands, around half of companies reviewed are publishing sustainability information that is subject to any assurance. For those that do obtain assurance, it is often being provided by consultants or others, and not by independent professional accountants who possess the unique combination of skills, qualifications, experience, and the professional ethical obligation to act in the public interest. * * * With investors increasingly incorporating sustainability matters into their asset allocation decisions, low-quality sustainability assurance is presenting a significant, global investor protection issue.”
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.