Value of Assurance by Sustainability Professionals
By Teresa Stutts and Gina MacIlwraith
Key Takeaways
- Assurance of sustainability information is growing rapidly as stakeholders seek credible, high-quality data
- Accounting firms are frequently conducting sustainability assurance engagements but they often lack a detailed understanding of sustainability issues and can be prohibitively expensive for smaller organizations
- Sustainability professionals better understand sustainability data collection and reporting processes to enable them to more effectively guide clients through the assurance process
- For organizations with an existing financial assurance provider relationship now including non-financial assurance, engaging a sustainability professional to facilitate audit preparation and support can help make the overall experience more valuable.
The growth of sustainability reporting accelerated at a rapid pace in recent decades, with nearly 100% of large, global companies reporting on sustainability at some level in 2023.i Concurrently, the assurance of that reported information exploded, growing to 69% in 2023, up nearly 20% from just four years before.ii While these statistics are focused on large companies, a similar trajectory is noted for smaller, private organizations, with assurance of sustainability disclosure providing an extra layer of credibility that can drive investor and customer trust and reduce cost of capital regardless of company size.iii
Sustainability Assurance Does Not Equal a Financial Audit
Globally, over half of sustainability assurance engagements are conducted by accounting firms.i However, sustainability assurance is not equivalent to a financial audit. While financial auditors have extensive knowledge and experience in accounting practices, they may not have a comparable depth of expertise in sustainability reporting practices. Sustainability professionals who conduct data and report assurance, meanwhile, bring direct experience with the nuances of collecting and reporting on sustainability data that allows them to better identify when something is de minimis, when something is truly critical to the reported information, and everything in between. From knowing the intricacies of individual disclosures and reporting regulations to understanding greenhouse gas emissions sources for a variety of industries and beyond, sustainability professionals bring a perspective to the assurance of this information that allows them to better understand your existing data collection and reporting processes and more effectively guide you through the assurance process.
Non-financial Firms Often Offer More Cost-Effective Assurance Services
For large, publicly traded companies who already have an established relationship with an accounting firm, working with their accounting firm may be the internally preferred course of action, provided they can demonstrate the requisite competence to assure the full breadth of non-financial information within the engagement. For these companies, it can be valuable to work with a sustainability assurance professional to conduct an assurance readiness assessment and prepare for the audit. If a company has more flexibility in selecting a sustainability assurance provider, non-financial firms can typically charge just 25-35% of what an accounting firm charges for comparable sustainability assurance.ii Particularly for smaller organizations, this mitigates what is often a major hindrance to achieving the level of third-party scrutiny that can enhance the credibility of your sustainability information.
How can SAS help?
With decades of collective experience in the sustainability field, SAS provides tailor-made sustainability assurance services that meet each organization’s unique needs and goals, ensuring that your assurance is not just a checklist item but a strategic asset to help ensure data quality to drive business performance and add value. If you are interested in discussing how SAS can support your assurance and verification needs, contact us today!
ii ESG assurance in the United States | Review of Accounting Studies
iii Save money by having your sustainability report assured – Journal of Accountancy