IFAC’s 2019-2021 Trends & Analysis “marks our third annual benchmarking study of global practice in sustainability disclosure and its assurance,” writes Kevin Dancey, Chief Executive Officer, IFAC, in the foreword to the report. “The momentum behind enhancing corporate reporting with environmental, social, and governance (ESG) or sustainability information continues – demonstrated by our findings that 95% of large companies report on ESG and 64% of companies now obtain assurance/verification over some of the information they provided in 2021 (increasing from 91% and 51%, respectively, in 2019).”

Dancey adds that “the need for a harmonized, global system for reporting decision-useful information is clearer than ever before, given 86% of the companies reviewed employed multiple standards and frameworks to prepare and present sustainability information. We continue to believe this practice neither supports consistent, comparable, and reliable information, nor provides a foundation for globally consistent, high-quality sustainability assurance.

This year, the report examines the extent to which companies provide forward-looking information on climate: emissions reduction targets and plans for achieving them.” While nearly two-thirds of companies disclosed targets, they lag the rate at which companies report their historic greenhouse gas emissions (97%). Other key highlights in this report demonstrate important global trends, as well as continuing jurisdictional differences.”

According to the publication, stand-alone sustainability reports remain a popular format for disclosure (especially in Canada, US and jurisdictions in Asia). But there are jurisdiction-specific trends toward reporting in annual reports and integrated reports, which provide more connectivity between ESG and financial information and support integrated decision making within companies.

• While most reporting focuses on multi-stakeholder and societal matters, using or referencing the TCFD Framework and SASB Standards has grown dramatically since 2019, albeit unevenly around the world.
• The rate of assurance has increased significantly from 2019 to 2021, but most engagements remain narrowly focused on greenhouse gas metrics. Little more than half (53%) of engagements encompassed a range of ESG disclosures.
• The International Auditing and Assurance Standards Board’s (IAASB) International Standard on Assurance Engagements 3000 (Revised) remained the most widely used assurance standard.

“Assurance enhances trust and confidence in ESG information and the systems and controls used to collect and report data,” the report says. “It also supports informed capital allocation decisions. We believe professional accountants are best positioned to conduct engagements that connect sustainability assurance with financial statement audits – all based on rigorous and widely accepted professional, quality management, and ethical standards. In fact, 70% of the time, companies that obtained sustainability assurance from a professional accountant engaged their statutory auditor to also review their ESG disclosures.”

In seven jurisdictions, however, non-accountancy service providers performed a majority of assurance engagements, albeit narrower in scope – focused on greenhouse gas or other environmental metrics.

According to Dancey and Susan S. Coffey CPA, CGMA, Chief Executive Officer – Public Accounting AICPA & CIMA, “As the ISSB, IAASB, IESBA collectively work to ensure their standards support high-quality sustainability disclosure and assurance, the accountancy profession must demonstrate to stakeholders why our profession is best placed to deliver assurance. We hope that this study continues to serve as a foundation for evidenced-based conversations amongst policy makers, regulators, preparers, and all users of sustainability information.”

Get the report at IFAC-State-of-Play-Sustainability-Assurance-Disclosures.pdf.