Tag Archives: Sustainability Reporting Assurance

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.

Can you trust the content of sustainability reports?

I have been away for a few weeks finishing the second edition of my book, Sustainability Reporting: Getting Started, to be published soon by Business Expert Press. The second edition is up-to-date with discussions about the GRI G4 guidelines, Integrated Reporting <IR> framework, and Sustainability Accounting Standards Board (SASB) guidelines. When the new edition is available, I will let you know.

In the past few weeks, I have read a lot of published GRI G4 sustainability reports. A whole lot! It was exciting to see so many organizations reporting. The people who wrote them ranged from novice to experienced reporters. Some were great reports with seemingly transparent details about their environmental and social impacts. Some were not as forthcoming.

For example, one of the GRI human rights indicators, (G4-HR12), requires reporting the “number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms.” While a few of the companies disclosed that there were mechanisms to deal with human rights violations, they then reported that the number discovered was confidential. Why is the number confidential? Why did they bother to report this indicator at all? It does their stakeholders no good to say there were problems, but that they have chosen not to disclose them. Let’s hope their stakeholders demand answers to such questions.

I felt much better about the transparency of companies that did report how many grievances were filed and how many were resolved. But should I feel better just because they published the numbers? Are these numbers accurate and how would a reader know? As external stakeholders, how would we know if anything in the report is trustworthy? Getting companies to publish sustainability reports is progress, but the next push in sustainability reporting is assurance of report content by independent, third parties.

Stay tuned for my next blog posts when I talk more about assurance.