The number of global companies obtaining independent assurance on their environmental, social and governance (ESG) information increased from 51% in 2019 to 58% in 2020, according to new data from the AICPA, International Federation of Accountants and Chartered Institute of Management Accountants (CIMA).
The 2020 information released Aug. 1 is an update to the accounting bodies’ inaugural study last year. A follow-up study that incorporates 2021 information is expected to be released at a later date.
Among the findings:
- When it comes to ESG assurance, 82% of ESG assurance engagements were limited in scope in 2020, essentially the same as in 2019 (83%).
- Some 61% of assurance engagements were performed by audit firms on a global basis, a slight decline from the previous year (63%). Jurisdictions with some of the highest rates of assurance performed by professional accountants include Australia, France, Italy, Germany and Spain. In other countries, including South Korea, the United Kingdom and the United States, most assurance work is conducted by service providers outside the accounting profession.
- On the reporting side, the study found 92% of global companies provided some ESG data to investors, either through integrated, annual or standalone reports.
- The study shows 89% of companies presented at least some information on greenhouse gasses, other environmental factors, social and governance, yet only 43% provided assurance for all four categories. The most common area for independent assurance was greenhouse gases (95%).
- Seventy percent of global companies that hired a professional accounting firm to perform the ESG assurance engagement chose the firm that audits their financial statements.
“High-quality reporting requires high-quality assurance,” said Susan S. Coffey, the AICPA’s CEO of public accounting. “Auditors already have a holistic view of a company’s risk profile, structure and processes, so it makes sense for that firm to also engage in ESG assurance. Professionally qualified and licensed accountants have the requisite expertise, objectivity, integrity and commitment to professional standards that are essential for instilling trust in ESG reporting.”
