More on assurance!
Assurance on Sustainability Reports
Two weeks ago, I attended a GRI sponsored event Enhancing credibility and trust of sustainability reporting hosted by Bloomberg in NYC. The purpose was to gather opinions on how to enhance the credibility of sustainability reports.
We had some interesting discussions! One topic in particular stood out for me. Why would companies have their sustainability reports assured when in many countries the reporting is still voluntary? This a great question! Presumably, they would have their reports assured because they get something out of doing so. There is value added when reports are assured but what will it take to increase the assurance rate?
I read a recent article in Forbes by Cindy Lubbers of CERES about how to get more companies to provide environmental, social, and governance (ESG) disclosures. The suggested solution was for stock exchanges to require more ESG disclosures. I think this is a great idea. The same would be true for assurance.
If stock exchanges can require more disclosures, they can surely require assurance of the information. This would definitely improve the information being provided to investors. If investors are relying on this information to make decisions, they should be able to have confidence that the information is reasonably accurate. Security exchanges are in a unique position such that they can set the standards for the companies that list with them. It is in their best interest to promote transparent and efficient capital markets. Adding a layer of assurance is a way to build trust and create long-term value.
In my next blog, I will talk about the qualities I think are needed by assurance providers.