ESG disclosure: How external assurance can help build trust

TRUST makes the economy go 'round. There is a very good reason why financial statements must be audited by an external auditor: Because it builds trust.

Sustainability and environmental, social, and governance (ESG) reporting is also undergoing external assurance in order to nurture trust. Ninety-one per cent of 1,400 companies across 22 jurisdictions report some level of sustainability information, and 51 per cent offer some level of assurance. That is according to The State of Play in Sustainability Assurance, a recent report from the International Federation of Accountants (IFAC) and the Association of International Certified Professional Accountants.

The question is: how can ESG assurance build trust in ESG disclosures when the external audit, the most advanced form of assurance, is struggling with a trust deficit? Or, will ESG assurance replicate the same mistakes and become old wine in a new bottle?