A majority, almost 3-in-4, of the largest global companies sought assurance on some aspect of their sustainability disclosures, according to a report, The State of Play: Sustainability Disclosure and Assurance (Five-Year Trends and Analysis, 2019-2023), from the International Federation of Accountants (IFAC) and AICPA & CIMA.
Seventy-three percent of large companies from G20 countries obtained assurance on their sustainability disclosures in 2023, up from 69% the previous year, according to the report. Five years ago, that number stood at 51%. The report notes that most of the assurance, then and now, is of limited scope.
More than three-quarters of companies now report sustainability information with financial disclosures in annual or integrated reports. Organizations that include sustainability information with their annual or integrated reports overwhelmingly use their statutory auditor to provide assurance over those disclosures.
"The largest global companies have responded well to voluntary systems of sustainability reporting and assurance, driven by investor demand," said IFAC Chief Executive Officer Lee White, in a statement. "With new global standards in place, regulators now have the toolkits to move from voluntary to mandatory disclosures over time, which we expect will further drive high-quality, consistent and comparable sustainability-related information for the investing public and all stakeholders. IFAC and our members, including AICPA & CIMA, remain committed to supporting this shift—advancing trust, good governance, and global alignment in sustainability disclosure, united in shaping a future where sustainability information earns the same level of trust as financial reporting."
Among other highlights of the updated study:
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Almost all companies (98%) report some information on sustainability. This is unchanged from last year.
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Use of sustainability information in annual reports continues to rise. Some 44% of companies included it in their annual report, up from 18% five years ago.
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Five jurisdictions had double-digit increases in sustainability assurance in 2023: Hong Kong, Indonesia, Mexico, Russia and Saudi Arabia.
Audit firms continue to lead (55%) in providing assurance on sustainability disclosures by large global companies, with broad variations from country to country. Audit firms' overall share of the market declined from 58% in 2022, although there are mitigating factors for the drop, including:
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Consolidation of reports – In the European Union, where audit firms historically provide the majority of sustainability assurance, firms began issuing a single assurance report instead of a series of separate ones, lowering the raw number of reports issued, albeit for an increased number of assurance clients.
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Consultants and non-audit firm service providers are more likely to issue multiple greenhouse gas-related assurance reports (for example, an average 2.5 assurance reports were generated per company in South Korea during 2023).
The report notes the increased use of audit firms over the prior year in several major markets in 2023, including Singapore (+6 percentage points), South Africa (+4), the United Kingdom (+5) and United States (+5). In the latter instance, audit firms' share of sustainability assurance rose from 23% to 28%.