When it comes to corporate ESG reporting and related assurance involving ESG issues, the largest global companies continue to show momentum, according to a new report from the International Federation of Accountants (IFAC) and AICPA & CIMA, the latter two of which form the Association of International Certified Professional Accountants.
However, significant hurdles remain in corporate ESG reporting when it comes to the provision of consistent, comparable and high-quality sustainability information for investors and lenders, AICPA said.
Some 95% of the 1,350 large companies reviewed in the study reported on ESG matters in 2021, the latest year available, according to AICPA.
That’s up from 91% in 2019, the accountancy body added.
In addition, 64% of companies obtained assurance over at least some ESG information in 2021, up from 51% in 2019, the study indicates.
But the inability so far to coalesce around agreed upon global standards continues to create challenges, AICPA noted
“Even as we see companies increasingly report on ESG and sustainability, the data we’re tracking reveals continuing fragmentation around the world in terms of which standards and frameworks are used,” said IFAC CEO Kevin Dancey.
“Eighty-six percent of companies use multiple standards and frameworks. This patchwork system does not support consistent, comparable, and reliable reporting. Importantly, it also does not provide the necessary foundation for globally consistent, high-quality sustainability assurance,” he noted.
Additional key findings
- Use of Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-Related Financial Disclosures (TCFD) framework have increased significantly between 2019 and 2021: there was a 29% increase for SASB standards usage and 30% for the TCFD framework.
- While accounting firms conduct more engagements, their market share—57% of sustainability/ESG assurance engagements—has declined from 63% in 2019.
- When companies obtained assurance from a professional accountant, they chose their statutory auditor 70% of the time.
- Globally, the International Auditing and Assurance Standards Board’s International Assurance Engagement Standard 3000 (Revised) remains the most popular standard when providing assurance:
- 95% of firms providing assurance use ISAE 3000, up from 88% in 2019.
- 38% of non-accountant service providers use ISAE 3000, up from 34% in 2019.