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This new report: “The State of Play in Reporting and Assurance of Sustainability Information: 2019-2021 Trends & Analysis” from the International Federation of Accountants (IFAC), the AICPA, and CIMA, updates data included in the second annual report and the inaugural report released by these organizations in 2022 and 2021, respectively, on sustainability disclosure and assurance practices as of the fiscal year 2021 reporting cycle (through March 21, 2022) among 1,350 companies headquartered in 21 jurisdictions consisting of the 100 largest companies in the six largest economies (including the US and the UK) and the 50 largest companies in 15 other jurisdictions.

Disclosure—US companies continued to rely primarily on standalone sustainability reports (as opposed to, e.g., annual or integrated reports) for their ESG disclosure—more so than any jurisdiction other than Canada. Use of stand-alone sustainability reports globally declined.

Standards/Frameworks—Up from 68% in 2019, 86% of companies globally used more than one framework/standard for reporting—most commonly the GRI and UN SDGs, although disclosure of the use of the SASB standards and TCFD framework increased 29% and 39%, respectively, year-over-year. Looking at the US specifically, more than 90% of companies referenced SASB and more than 80% of companies referenced the TCFD in their ESG reporting for fiscal 2021.

Net Zero Targets—Nearly half of companies globally disclosed having set a net zero emissions reduction target in fiscal 2021. Looking at the US specifically, ~38% of companies set targets including Scopes 1, 2, and 3; ~32% set targets for Scope 1 and 2; and ~28% set other targets.

Assurance (For purposes of these statistics below, note that assurance over even one ESG metric counts as having obtained assurance.)

• 82% of US companies obtained assurance over some reported ESG information in 2021, generally on par with last year and compared to an average of about 64% worldwide.  
• Slightly higher than the global average, 81% of US company assurance reports were “limited” in 2021. Globally, assurance was most commonly obtained for GHG metrics. 
• Consistent with 2019 and 2020, US companies obtained assurance largely from service providers other than audit firms in 2021, with audit firms comprising approximately 15% of the service provider pool in 2021, compared to a global average of 57% (which still represents a worldwide decline in the use of audit firms from 2020 and 2019).

• Among the minority of US companies that obtained assurance from an audit firm, 93% used their primary financial audit firm compared to 70% worldwide.
• ESG-assured information lagged companies’ annual reports by about 111 days on average in the US, compared to a worldwide average of 51 days (dashed lines reflect averages in 2020 (white) and 2021 (pink)): 
  

See IFAC’s release; “Professional accountants fall out of favour on ESG assurance” (Responsible Investor); and additional resources on our Sustainability and Climate Disclosure & Risk pages.

                      This post first appeared in the weekly Society Alert!