Sustainability Reporting Assurance Trends in USA

GRI Trends in External Assurance of Sustainability ReportsAs an ESIA and sustainability advisor who supports clients to become more bankable, credible and sustainable, I remain fascinated by the peculiarities of the assurance market in the US.

GRI’s recent publication, Trends in External Assurance of Sustainability Reports, highlights some of the unique elements of the US market. (http://wp.me/p27qSt-Fo)

GRI notes that more than 5,000 organizations in over 88 countries globally use GRI’s Sustainability Reporting Framework to publish sustainability reports. This includes 266 reports published by US-based reporters, a number which has more than doubled over the past five years (possibly mainly due to improved data capture as I blogged previously).

GRI+ Reports Global and US

GRI's Trends in External Assurance of Sustainability Reports points out that, globally, about 38 percent or GRI reporters subjected some or all of their reported data to an external assurance process. However, only about 10 percent of US-based GRI reporters underwent a similar assurance process. It makes you wonder: why would US-based reporters and users/readers be any less interested in the accuracy and credibility of related systems and data?

Conversely, some US-based GRI reporters use multiple assurance processes. GRI's publication notes that organizations like Bristol Myers Squibb, 3M, UPS and Agilent Technologies obtained two or more external assurance engagements. Are these companies just mad – or do they realize extra value from these assurance processes which escape their peers?

Given the focus of this GRI publication on Trends in External Assurance of Sustainability Reports in the US, there is no discussion on the use of stakeholder panels as an alternative way to boost reporting credibility (about which I blogged previously - and see also Assisting World Bank with Sustainability Reporting Review Panel).

As a consultant in the sector, it is also interesting to note that the market for assurance service providers in the US remains very different when compared to the rest of the world. Globally, 65% of the assurance of GRI reporters was conducted by accountancy firms. In the US, such firms only provide about one third of assurances (in a small but growing market niche). The rest of the US pie is enjoyed by boutique or branded consulting and engineering firms selected by these fine firms:

3M Co., ABM Industries Inc. , Agilent Technologies, Air Products & Chemicals Inc., Amgen Inc., Bank of America Corp., Biogen Idec Inc., Bloomberg L.P., Dow Chemical Co., Eaton Corp.,Freeport-McMoran Copper & Gold, Hess Corp., IFF,Kimberly-Clark Corp., Mohawk Industries, Moody’s Corp., Mosaic Co., Newmont Mining Corp., Nisource Inc., NVIDIA Corp., PNNL, Praxair Inc., Prologis Inc., Sigma-Aldrich Corp., Southwest Airlines Co., Sprint Corp., State Street Corp., Tyco International Ltd., UPS Inc., Waggener Edstrom Worldwide Inc.

There seems to be a growing list of assurance standards, particularly in the US, that probably continues to confuse the market and may be a contributing factor to a slower uptake of assurance practices in the US. The most common standards used for sustainability reporting are the following:

  • International Standard on Assurance Engagements ISAE 3000 a generic standard for any assurance engagement other than audits or reviews of historical financial information - typically referenced by accountancy firms.
  • AccountAbility AA1000 Assurance Standard (AA 1000AS) which was specifically developed to assure the credibility and quality of sustainability performance and reporting (and one we adopted for a recent assurance engagement).

Why has your organization adopted or avoided assurance for its corporate responsibility or sustainability reporting practice? How do you see this market place developing for assurance providers ranging from small firms to large accountancy firms?

Check out Mehrdad Nazari's LinkedIn profile here.

2 Comments to Sustainability Reporting Assurance Trends in USA

  1. Hi Mehrdad
    I found this commentary very interesting.
    I see two extreme opposite positions in approach to assurance in the markets where I operate. Those companies who do the minimum to tick the box to comply with industry codes or reporting indexes to get a ‘score’, and those who are engaging assurance providers for the internal process and data improvement achieved for internal comfort that they are putting good information out there for stakeholders.
    Let’s hope that the last mentioned position drives more companies’ going forward.
    Best
    Petrus

  2. Mehrdad says:

    Yes, ‘SRI/ESG scoring’ seems to be an important driver in markets which require such things (like JSE). I feel many companies simply don’t realize how unreliable their internal systems and data really can be. Such poor data and systems make good decision making, such as efficient allocation of resources and risk management very difficult.

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