In a recent report, “The State of Play: Sustainability Disclosure and Assurance,” the International Federation of Accountants (IFAC) and the Association of International Certified Professional Accountants (AICPA) looked at global environmental, social, and governance (ESG) reporting and assurance practices. They looked at reports from 1350 companies in 21 jurisdictions that included ESG information to do this. A new report from the IFAC and the AICPA says that the biggest companies in the world are still making progress on environmental, social, and governance (ESG) reporting and assurance. But there are still problems with giving investors and lenders consistent, comparable, high-quality information about sustainability.
“Steady increases in reporting and assurance are significant, yet more companies need to take the additional step to obtain assurance to build trust and confidence in what they report,” said Susan Coffey, AICPA & CIMA’s CEO of public accounting.
One of the essential things the study found was that 95% of the 1350 companies reported ESG information in 2021. In addition, the percentage of companies that obtained assurance on some of their ESG reporting improved from 51% in 2019 to 64% in 2021. The International Standard on Assurance Engagements (ISAE) 3000 (Revised) from the International Auditing and Assurance Standards Board (IAASB) was still the most common standard for ESG assurance engagements, used by 70% of the companies. But the fact that audit firms’ total number of assurances went down from 63% in 2019 to 51% in 2021 indicates a growing number of other ESG assurance providers.
Information shared according to the Greenhouse Gas Protocol (GHG) and European legal standards is often the subject of assurance. This report by IFAC and AICPA also looked at how much companies tell us about their goals and plans for reducing emissions in the future. While two-thirds of companies disclosed targets, they lag the rate at which companies report their historic greenhouse gas emissions (97%). Over 2020, there have also been 29% and 30% more references to the Sustainability Accounting Standards Board (SASB) Standards and the Task Force on Climate-related Financial Disclosure (TCFD) Framework.
The number of companies that reference their reports with Global Reporting Initiative (GRI) Standards and the UN Sustainable Development Goals (SDGs) stayed high, with 74% and 79%, respectively. Remarkably, companies that follow the GRI Standards are more likely to get external assurance for the information they put in their reports than companies that follow any other framework or standard.