According to ACCA, investors seeking to place reliance on corporate sustainability information are driving unprecedented demand for assurance in this emerging area. 

This represents a challenge and an opportunity for the global accountancy profession. In response the profession is engaged in determining the framework within which assurance engagements should be carried out and who is best qualified to perform the work. 

Using the core assurance skills obtained through the experience of auditing financial statements, the accountancy profession – alongside others performing assurance engagements – is well placed to satisfy this demand.

ACCA’s report Sustainability Assurance – Rising to the Challenge describes the landscape for sustainability assurance and introduces the extant standard and guidance issued by the International Auditing and Assurance Board (IAASB).

ACCA’s research – supported by evidence gathered from a series of virtual global roundtables held in 2022 and 2023, with assurance practitioners and other representatives involved with audit and assurance policy-related matters – sets out seven key messages:

  • To avoid a new ‘sustainability assurance expectation gap’ ACCA stresses the importance of international and national standard setters explain what ‘limited assurance’ and ‘reasonable assurance’ mean, and the key differences between the two. 
  • Standard setters should consider the risk of misleading reporting – greenwashing – when developing reporting and assurance standards. 
  • A concept to deal with estimates should be a key focus for the IAASB as much sustainability reporting and assurance work is often based on hypothetical scenarios.
  • The unprecedented dependence on subject matter experts (SMEs) for sustainability assurance engagements may suggest the need for further standards and guidance on how to rely on their work. 
  • The assurance report – the end-product – should be seen as a key priority area by standard setters and policy makers, particularly in dealing with limited/reasonable differences.
  • Assurance skills obtained through audit experience remain vital in performing sustainability assurance engagements. 
  • ISAE 3000 (Revised) and the Sustainability/EER guidance provide a strong foundation for those intending to undertake sustainability assurance engagements before the IAASB’s overarching standard is finalised.

ACCA audit & ethics lead, and co-author of the report, Marianna Rogdaki, said: “ACCA recognises that it can be a real challenge for practitioners new to this area to come to grips with both the risks and the opportunities of taking on sustainability assurance engagements. This report aims to raise awareness of the current landscape as a good starting point for practitioners to get involved.”

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Rogdaki addded: “It is clear that the demand for sustainability information is now higher than ever, with regulators across the globe considering mandatory reporting and assurance requirements. 

“Most notably in the European Union, the European Commission has replaced the Non-Financial Reporting Directive (NFRD) with the Corporate Sustainability Reporting Directive (CSRD) introducing mandatory requirements for more entities, alongside requirements for assurance over published information.”

ACCA head of audit and assurance, policy & insights, and report co-author, Antonis Diolas, further said: “In our roundtable the importance of professional scepticism was noted. Given the immaturity of sustainability reporting, professional scepticism is even more important where subjective statement often forms part of sustainability reports and are not backed up with sufficient appropriate evidence.”

The report commends the IAASB, the International Sustainability Standards Board (ISSB), and the International Ethics Standards Board for Accountants (IESBA)  for their respective swift responses to the call for international sustainability reporting, assurance and ethical standards, reducing the risk of fragmentation.