This new report: “The State of Play in Reporting and Assurance of Sustainability Information: Update 2019-2020 Data & Analysis” from the International Federation of Accountants (IFAC), the AICPA, and CIMA updates data included in an inaugural report released last year (we reported on here) on sustainability disclosure and assurance practices as of the 2020 reporting cycle among the 1,400 largest companies in 22 jurisdictions worldwide. US data is based on an analysis of the largest 100 companies by market cap as of March 22, 2021.
Disclosure
- US companies continued to rely primarily on standalone sustainability reports for their ESG disclosure. Compared to 2019, one additional company disclosed its ESG information in its annual report in 2020.
Assurance (For purposes of these statistics below, note that assurance over even one ESG metric counts as having obtained assurance.)
- About 80% of US companies obtained assurance over some reported ESG information in 2020, up from approximately 70% in 2019 and compared to an average of about 58% worldwide.
- Globally, 82% of assurance reports were limited in 2020, generally on par with 2019. The balance in 2020 were split between moderate assurance (23%) and reasonable assurance (18%). Assurance was most commonly obtained for GHG metrics (95%).
- US companies obtained assurance largely from service providers other than audit firms in both 2020 (about 85%) and 2019 (about 90%), with audit firms comprising approximately 15% and 10% of the service provider pool in 2020 and 2019, respectively. This compares to a worldwide average in the use of audit firms providing assurance of 61% in 2020 and 63% in 2019, respectively, illustrating vast differences in the type of service provider commonly used across regions.
- Among those US companies that obtained assurance from an audit firm, close to 95% used their primary financial audit firm compared to 71% worldwide.
- US companies that obtained assurance most commonly (~45%) provided evidence of assurance on their company website. About 30% included the assurance in their annual report (compared to 76% worldwide), and the balance included it in another location such as their sustainability report.
- ESG-assured information lagged companies’ annual reports by about 100 days on average in the US, compared to an average of 54 days between the issuance of companies’ statutory audit report and ESG-assured information worldwide.
Standards/Frameworks
- Up from 68% in 2019, 80% of companies globally used more than one framework/standard for reporting – most commonly the GRI and UN SDGs.
See IFAC’s release; these articles: “Global Study: More Companies Seeking Assurance on ESG Reports” (INSIDE Public Accounting) and “More companies obtaining ESG assurance, according to global survey” (Journal of Accountancy); and additional resources on our Sustainability and Climate Disclosure & Risk pages.
This post first appeared in the weekly Society Alert!