External Assurance for Sustainability Reports: Ensuring Transparency and Trust

There was a time not long ago when we took each other’s word at face value. I would like to believe that is still true to an extent; nevertheless the principle is, as US President Ronald Reagan famously said, “trust, but verify”. Historically, the president uttered those words in the context of nuclear disarmament discussions with the Soviet Union. Upon some verification however, the phrase ironically originated from a Russian proverb. Climate change on its surface may not be as dire as nuclear disarmament negotiations, but it’s a ticking time bomb in and of itself. When the stake is human survival, corporations can no longer indulge in their ‘trust me bro’ attitude when it comes to carbon emissions.

The transition from a traditional economic model to one of circular economics shifts the market to favor the more sustainable. Companies went out of their way to push the sustainability agenda, but evidently it is a herculean task. When the bottom line is profit, sustainability seems a normative effort which in turn stands first in line for reconsideration and funding cuts. Then much of the proposed changes gets cancelled and all that’s left are the tag lines. A cliche chain of events we see in way too many corporations big or small. It all culminated in the coining of the term we all know too well - greenwashing.

Corporations then began to publish sustainability reports within or in conjunction with their financial reports; some out of necessity by means of government regulations, others to capture the shifting market. In terms of how it is written, there are standards and frameworks that are constantly improved and perfected. Standards keep the report organised and the data comprehensive by dictating what information to be reported. While frameworks provide the concepts or frames that contextualises the information provided. These however are not rigid categorisations of the alphabet soup of sustainability jargons associated with sustainability reporting, merely a way to easily understand the differences. All this is well and good but as much as we trust these reports, unlike financial statements, there’s no way to verify the information provided therein. That’s where external assurance comes into the picture.

External or independent assurance refers to a third-party verification process that validates the credibility of a sustainability report. It’s not simply an extension of how a report is written, but rather comparable to the audit process in financial reporting. Financial reports have rules and guidelines as to how it is written, the parameters of data handling, and other measures for ease of verification and benchmarking, that is what sustainability reporting is striving towards. This is especially true for the purposes of carbon trading in the emerging carbon markets. Carbon pricing mobilized over USD 100 billion for public budgets in 2024. The moment tCO2e translates to monetary values, certain standards of accountability are expected.

Companies and organizations who are trying to tap into the ever expanding ESG investments funds race to get their sustainability reports assured as it is a requirement and/or prerequisite of most if not all of these funds. A recent PwC global survey of asset managers and institutional investors stated that there’s a projected USD 33.0 trillion in ESG-oriented AuM by 2026, outpacing the industry as a whole. This in turn grows the demand for and the need of external assurances for sustainability reports. It builds credibility and puts weight on the data and sustainability claims presented in an organisation’s report.

Much like reporting frameworks, external assurance also comes in a variety of options. Summed up for you in the following table:

While these standards set the principles and technical requirements for assurance, their practical application depends on external assurance providers, firms, and accredited verifiers who interpret and implement them. In practice, global audit firms and specialized sustainability consultancies select frameworks based on client needs, regulatory context, and the type of sustainability data being assured. This can range from the big 4 audit firms (KPMG, PwC, EY, and Deloitte) to specialist assurance bodies like Bureau Veritas to sustainability consultancies like Sustainahaus. There are also GHG specific verifiers that cater specifically to carbon neutral claims and project-level verification.

In short, assurance frameworks provide the methodological backbone, while assurance providers bring technical expertise and credibility. The alignment between a company’s reporting framework (e.g. GRI, ISSB, ESRS) and the assurance provider’s chosen standard (e.g. AA1000AS or ISAE 3000) determines both the depth and the perceived reliability of the sustainability disclosure.

Sustainahaus has been a licensed AA1000 Assurance Provider since 2022 and has since been assuring our clients SR and GRESB submissions annually. Our assurance work focuses on evaluating the inclusivity, materiality, responsiveness, and impact of our clients’ sustainability disclosures, helping them strengthen data integrity and stakeholder confidence while aligning with internationally recognised reporting and ESG performance standards.