Financial Leaders Report Lack of Standardization in Sustainability Assurance
Global practices for sustainability reporting and assurance over that information - including level of assurance and standard and practitioner used - varies widely, according to a recent study from the International Federation of Accountants (IFAC) and the AICPA & CIMA (representing the Association of International Certified Professional Accountants). This groundbreaking review provides a comprehensive global picture of sustainability reporting and related assurance.
The study further contextualizes this analysis with data on how and where sustainability-related information is reported, and how this relates to assurance practices.
As the drive toward a global system for sustainability-related reporting continues, investors, regulators and policymakers are turning their attention to the important role of assurance in promoting high-quality reporting. With the growing importance of - and reliance on - sustainability information, low-quality assurance is an emerging investor protection and financial stability risk.
“The global community needs to consider many complex questions - should reporting sustainability information be required? If so, should assurance be required, and by whom? With this new data in hand, IFAC is initiating evidence- based conversations with our member organizations and other global stakeholders to advance the global debate and help plot the way forward in the public interest,” said IFAC CEO Kevin Dancy.
“Companies that publish sustainability information that is subject to assurance by professional accountants have an opportunity to bring trust and reliability to their sustainability information. Engaging a licensed professional accountant who possesses the right combination of professional skills, qualifications, experience and is subject to independence, ethical and monitoring requirements can result in truly meaningful assurance and transparency,” said Susan S. Coffey, CPA, CGMA, CEO of Public Accounting at the Association of International Certified Professional Accountants. “As it stands, only around half of the companies reviewed in this study publish sustainability information that is subject
to any assurance.” IFAC and AICPA-CIMA partnered with Audit Analytics, studying environmental, social, and governance (ESG) reporting and assurance practices on a global basis. 100 companies were reviewed from each of the largest six economies, with 50 companies reviewed in the remaining 16 jurisdictions.
The full study is available at www.aicpa.org.