Assurance 101

Sustainability assurance doesn’t have to be confusing.

This article breaks down the basics — what sustainability assurance is and what you need to know to navigate it with more confidence. You can also watch our webinar on Assurance 101 and unlocking its value.

What is the difference between verification, validation, and assurance? 

Validation is a forward-looking process to evaluate strategy and expected effectiveness (e.g., validating a future target that has been set) 

Verification is a retrospective assessment to confirm historical figures, calculations, activity, etc. are accurate 

Assurance is the end result of a validation or verification engagement, i.e., the letter or report stating the degree of confidence in the data and reporting.  

How does limited assurance differ from reasonable? 

Limited assurance is a review of the processes and calculations where the extent of the analysis (e.g. completed virtually, less required evidence, etc.) provides a lower confidence level. The outcome is typically negatively worded, i.e., that there is no reason to believe that anything within the report or data is incorrect. 

Reasonable assurance is a more rigorous examination of processes and calculations (e.g. completed on-site, more required procedures, etc.) that provides a higher confidence level. The outcome is typically positively worded, i.e., that the data or reporting evaluated is correct.  

What are some important characteristics to look for in an assurance provider? 

1. Confirm that they are impartial and independent. 

2. Look for a certification or accreditation that conveys the credibility of the organization. 

3. Ensure that the assurance professionals are competent and knowledgeable in the area of expertise related to your claim.  

4. Verify that the service that the auditor provides meets the requirements specified by any regulations, assessments, or programs that are relevant to your organization.  

Why is third-party assurance important for sustainability information? 

Third-party assurance increases transparency, credibility, and accountability in sustainability data and reporting. Several regulations, such as the Corporate Sustainability Reporting Directive (CSRD) and California SB 219, are mandating assurance but even for those not required to pursue assurance via regulation, third-party assurance of sustainability data and reporting reduces risk of scrutiny related to greenwashing and increases stakeholder confidence in your claims. 

In addition, many sustainability assessments or ratings, such as CDP, EcoVadis, GRESB, and S&P Global, incorporate assurance into their rating systems or questionnaires, lending greater credence to reports/data that were subject to third-party verification or validation processes; therefore, incorporating assurance prior to your submissions can help to increase your score or rating within many of these assessments.  

What can I expect during the assurance process? 

The assurance process generally begins with an engagement agreement or fee proposal. In developing this agreement, the auditor will request information to understand the data, report, or other claims for which the client is seeking assurance, the applicable assurance standard and level of assurance, relevant regulations or program requirements to be considered, and other questions relating to the scope and timeline for the engagement. Once the scope is finalized, the auditor will then ask for initial evidence relating to the claim to be assured, such as the sustainability report, greenhouse gas emissions calculations, non-financial data management processes, and more.   

Based on this documentation, the auditor will develop a verification plan and use the provided evidence, publicly available information, and stakeholder interviews to verify the information. During this stage, you can expect some back-and-forth with the auditor as necessary to provide further information or answer any clarifying questions. The auditor may also present some corrective actions that must be addressed prior to the issuance of the verification opinion.  

For most assurance engagements, this process outlined above should take approximately 1-2 weeks once the verification starts.  

What if I am not sure I am properly prepared for assurance yet? 

For those who are unsure about the assurance process or would like to make their assurance as smooth as possible, a readiness assessment can be very helpful. A readiness assessment is an evaluation to determine whether your sustainability data or report is prepared to ‘pass’ an assurance audit, including:  

• Comparison: How do your existing data collection processes and related documentation match the applicable sustainability assurance standard requirements (including determining the correct assurance standard to meet your needs)? 

• Gap analysis: Is there anything missing from your processes and/or documentation? 

• Recommendations: Providing an action plan to address gaps 

For reports in particular, engaging an auditor to conduct a readiness assessment prior to report publication can be especially helpful as it allows for more active editing to better enable assurance once the report is completed.