Sustainability Within Reach
Thoughts and observations on sustainability

Assurance is key to justifying trust in sustainability reports

Assurance sounds so reassuring! Something that is assured should give you confidence that it is credible. Shouldn’t it?

Consider the case of audited (assured) financial statements conducted by independent CPAs. Let’s say that they give an unqualified or “clean” opinion to a company’s financial statements. After reading such a report you should have confidence that the numbers are “fairly” presented. But what does fairly presented mean? It does not necessarily mean that the company is doing well. It only means that the numbers and information contained in the report fairly represent what is going on with the company. Financial statement audits are done in accordance with generally accepted auditing standards, and the final audit report must use standardized wording. Indeed there aren’t a lot of choices in how the audit is done or in how the report is worded.

What about assurance for sustainability reports? Unlike financial statement audits for publicly held companies, assurance isn’t required and standards are still developing. Yet demand for report assurance is increasing as more people depend on sustainability reports to make decisions about these companies. They want to be assured that the information in the report is accurate.

What are the options for report assurance? There are several choices to be made. First, who is doing the assuring? There are many groups (e.g., accountants, consultants, engineers) that do this work and each of them has a different perspective on report assurance. Second, which standards do they use in evaluating the report? Some standards are intended to evaluate stakeholder engagement and materiality processes while others are intended to attest to the accuracy of the information presented. The scope of the assurance also varies. Some companies, for example, only have their greenhouse gas (GHG) emission disclosures verified while others have a review of the entire report conducted.

In my next post, I will talk more about these different assurance options.