Verdantix Says Increasing Sustainability Risks Push Firms To Buy Assurance From The Big Four Audit Firms
London, June 21, 2011. Investment in sustainability assurance is increasing as firms seek to improve the credibility of sustainability reports and provide greater confidence to the Board about management systems, performance data and risk controls. This is according to an in-depth benchmark of global sustainability assurance providers, conducted by independent analyst firm Verdantix. The study compares 13 providers on 48 criteria including energy and environment expertise, knowledge of standards and customer wins. The presence of the ‘Big Four’ financial audit firms as market leaders, along with Bureau Veritas and DNV, demonstrates the financial materiality of sustainability risks.
“Heads of Sustainability, EH&S Directors and CSR Directors have typically purchased assurance of sustainability reports, GHG inventories and environmental management systems from a wide variety of providers,” commented James Beresford, Verdantix Analyst and author of the report. “Our research found that sustainability risks tied to corporate reputation and compliance are on the increase. So CFOs are getting more involved in the selection of assurance providers. This is one reason why firms increasingly buy sustainability assurance from the Big Four audit firms.”
The Verdantix Green Quadrant analysis reveals that Bureau Veritas, Deloitte, DNV, Ernst & Young, KPMG and PwC lead the market. These global firms have the expertise and resources to deliver across the full spectrum of sustainability assurance engagements. Each of the leaders scores highest in at least one of the eight assurance service lines. They all perform well in core assurance engagements: sustainability reporting, risk analysis, GHG inventories and responsible supply chain. Compared to BSI, ERM, LRQA, SGS, TÜV SÜD, UL-DQS and URS the leaders generally score higher on the quality of their internal sustainability programmes and their brand awareness with customers.
According to the 15 member customer panel interviewed as part of the research, adding credibility to external communications is still the primary purchase driver. Eighty-seven per cent of the interviewees stated that the role of assurance is to add credibility to information communicated externally. One-third consider that assurance has a role to play in validating the accuracy of GHG data. Twenty-seven per cent believe that assurance has a role in managing reputational risks, improving management confidence in sustainability data and testing internal processes.
Buyers shortlist assurance providers based on their experience with relevant standards, for instance ISAE 3000, their sustainability expertise and accreditation with standards or certification bodies. Cost effectiveness is the fourth most important purchase criterion. The customer panel consider that PwC has the strongest sustainability expertise, followed by KPMG, ERM and DNV. Some buyers voice concern about the added value of assurance due to the lack of interest from external stakeholders who are the primary target audience for assurance statements.
“New sustainability assurance requirements are opening up every year,” said Janet Lin, Senior Manager in the Verdantix New York office. “Green marketing claims, compliance for aviation firms in the EU Emissions Trading Scheme from 2012 onwards, French regulations on product lifecycle assessment and the CDP’s requests for water footprinting are emerging areas of assurance. These market trends create innovation opportunities for suppliers with specialist skill sets.”
The Verdantix report, Green Quadrant® Sustainability Assurance (Global) compares BSI, Bureau Veritas, Deloitte, DNV, ERM, Ernst & Young, KPMG, LRQA, PwC, SGS, TÜV SÜD, UL-DQS and URS. The criteria and weighting are based on insights from interviews with a panel of 15 international buyers with combined revenues of $362 billion, responses to a 48 point questionnaire and interviews with practice leaders at participating firms. The report is available to Verdantix clients at www.verdantix.com.
About Verdantix
Verdantix is the fastest-growing, independent analyst firm focused on energy, environment and sustainability. Through our global primary research and deep domain expertise we provide our clients with strategic advice, revenue generating services, best practice frameworks, industry connections and competitive advantage. For more information visit www.verdantix.com.
Press contact
Elinor Newman-Beckett, +44(0)203 371 6792
press@verdantix.com
Tuesday, 21 June 2011