Be Sure To Assure: Insights From Our ESG Assurance Services Buyer’s Guide

Be Sure To Assure: Insights From Our ESG Assurance Services Buyer’s Guide

ESG assurance requirements are set to shake up the sustainability reporting landscape in both the US and EU. The US Securities and Exchange Commission is finalizing a rule that will require assurance over emissions disclosures, impacting approximately 6,700 businesses. In November, the European Council gave the final green light to the CSRD, meaning that roughly 49,000 in-scope firms will need to seek assurance of sustainability disclosures. These developments will significantly raise the stakes for reporting organizations and will call for better governance and controls around ESG data collection. Firms are already beginning to prepare for this overhaul of reporting practices by bringing internal audit teams into the mix and engaging external assurance providers.

To help organizations prepare for ESG assurance requirements, Verdantix has released the 2022 Buyer’s Guide: ESG Assurance Services. This report includes profiles on 9 ESG assurance providers and issues guidance on key criteria that buyers should consider when selecting a service provider. Crucially, this report sets out the business case for ESG assurance, beyond simply achieving compliance. It explores how assurance can be used to:

• Inspire confidence and trust in sustainability data.
  External assurance is a vital tool for enhancing the trustworthiness of data. As ESG and sustainability information becomes a mainstream consideration in business decision-making, organizations that can substantiate their sustainability claims stand to gain a competitive advantage.

• Reduce the risk of greenwashing.
  Organizations are growing increasingly concerned about litigation and reputational risks as sustainability claims are placed under greater scrutiny. The number of high-profile greenwashing incidents is only set to increase with the rise of net zero pledges and potential misuse of net zero narratives.

• Enable more fact-based decision-making.
  Internal stakeholders require reliable information on material ESG risks for decision-making and long-term strategic planning. Independent assurance can provide management with the confidence that their decisions are well-founded and complete. This is particularly important for businesses such as manufacturers or utilities that depend on stationary assets with long life cycles, which could be significantly impacted by climate change.

Over the coming years, firms will face increasing pressure to demonstrate transparency, integrity and accountability, and external assurance is an important step towards achieving this. To enhance the credibility of assurance, firms will need to select a provider who can demonstrate an in-depth understanding of their specific business, industry and geography, as well as subject-matter expertise. For more information on how to navigate the rapidly evolving ESG assurance service market, see our latest report.