More than half of companies are asking for independent assurance on their sustainability data, but many aren’t turning to their accounting firms for it, according to a new survey.
The
The 2020 information updates a study released last year by IFAC, the AICPA and CIMA on global trends in both sustainability-related reporting and assurance. A follow-up study with 2021 information is expected later.
There was little progress on increasing the scope of the engagements compared to 2019. While 82% of engagements were limited in scope in 2020, that was basically the same as in 2019 (83%). While 61% of assurance engagements were done by audit firms on a global basis in 2020, that represented a slight decline from the previous year (63%). Countries with the highest rates of assurance from accounting progress included Australia, France, Italy, Germany and Spain. But in other countries, including South Korea, the U.K. and the U.S., most assurance engagements are performed by service providers outside of the accounting profession.
On the reporting side, the study found 92% of global companies provided some ESG data to investors, either through integrated, annual or standalone reports. The use of, or reference to, Sustainability Accounting Standards Board standards more than doubled in 2020. SASB’s parent organization, the Value Reporting Foundation, consolidated into the IFRS Foundation and its recently formed International Sustainability Standards Board on Monday.
“It’s encouraging to see continued high levels of reporting on sustainability information and an overall increase in assurance globally,” said IFAC CEO Kevin Dancey in a statement. “But our research tells us that 80% of companies are using multiple frameworks or standards, which results in data that is not consistent, comparable or decision-useful for investors, stakeholders or society at large. Sustainability reporting and assurance will only reach its full potential when it is based on a harmonized global system led by the International Sustainability Standards Board’s comprehensive baseline of disclosure.”
The 2020 study data found 89% of companies presented at least some information in each of four categories: greenhouse gasses, other environmental factors, social and governance. But only 43% offered assurance on all four categories, with the most common area for independent assurance being greenhouse gas emissions (95%). A 70% majority of global companies that engaged an accounting firm to perform the ESG assurance engagement selected the firm that also audits their financial statements.
“High-quality reporting requires high-quality assurance,” said AICPA and CIMA CEO of public accounting Susan Coffey in a statement. “Auditors already have a holistic view of a company’s risk profile, structure and processes, so it makes sense for that firm to also engage in ESG assurance. Professionally qualified and licensed accountants have the requisite expertise, objectivity, integrity and commitment to professional standards that are essential for instilling trust in ESG reporting.”
