The Institute of Chartered Accountants of Scotland (ICAS) has called for the UK government to urgently provide a roadmap for sustainability assurance (SA).
It has issued a response to the Financial Reporting Council’s (FRC) release of the final report from its Assurance of Sustainability Reporting Market Study.
It emphasises the need for professionals in the field to adhere to stringent performance, quality management, and ethical standards to ensure a fair competitive environment.
The FRC’s final report outlines the findings from its study, which was launch in March 2024, focusing on the assurance of sustainability reporting by UK companies.
The report is based on engagement with various stakeholders, including private companies, assurance service providers, investors, and academic institutions, all with vested interests in sustainability.
The market study delved into three main areas.
These encompass the choice and competition among SA providers and the capacity of the market along with potential barriers to entry and expansion.
Lastly, it includes the regulatory framework, particularly in light of evolving international requirements that could impact the UK market.
ICAS CEO Bruce Cartwright said: “We agree with the FRC that the quality of these services is inconsistent. While we’re encouraged to see such a wide range of sustainability assurance service providers in the UK, it’s vital that we create the right conditions for healthy competition and choice in the market but not at the detriment of quality.
“We also agree with the report’s concerns about the lack of clarity on the UK’s regulatory position, which is having an adverse effect on the UK’s ability to participate in this market – particularly when it comes to sustainability assurance engagements under the EU’s Corporate Sustainability Reporting Directive (CSRD) which is already impacting certain UK entities.
“Ultimately, we believe the UK should take a leading role in this area, and that a robust, but proportionate regulatory framework is key to make sure that stakeholders have high-quality sustainability information to help them make informed decisions.”
This development comes in the wake of concerns raised by the Association of Chartered Certified Accountants (ACCA) regarding potential risks in the UK’s sustainable reporting assurance market.
