Author: Dhanush TN
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As the world grapples with environmental and social challenges, businesses are increasingly recognising the importance of transparent reporting. The FTSE 100, a group of the largest publicly traded companies in the UK, is no exception. Let’s delve into the latest trends in ESG (Environmental, Social, and Governance) assurance based on KPMG’s findings.
In 2023, a remarkable 79% of FTSE 100 companies sought external assurance for their ESG metrics—a 4% increase from 2021. This means that the majority of these companies now have experience with the rigorous requirements of the assurance process. As regulations tighten, collaboration across different teams within organizations becomes crucial. The Corporate Sustainability Reporting Directive (CSRD), set to mandate comprehensive ESG reporting from 2024, underscores the urgency of accurate and transparent disclosures.
A noteworthy trend emerged: 47% of companies obtaining ESG assurance in 2023 engaged the same practitioner for both ESG assurance and financial statement auditing. This 14% increase from 2021 reflects a strategic move toward consolidating assurance and audit services. The CSRD’s requirements overlap with those of the European Sustainability Reporting Standards (ESRS), making alignment between ESG assurance and financial audits even more critical.
The Big 4 accounting firms—Deloitte, PwC, EY, and KPMG—played a pivotal role in ESG assurance. In 2023, 63% of FTSE 100 companies chose these firms for their assurance needs, marking an 8% increase from 2021. As reporting requirements intensify, more companies may seek alignment between their assurance and audit practitioners, leveraging the expertise of these industry giants.
Interestingly, only 52% of assurance reports in 2023 were signed on the same day as the financial statements audit report. This highlights the need for improved coordination. Most ESG assurance reports (94%) provided limited assurance, a lighter touch compared to the rigorous procedures of reasonable assurance. However, one company stood out by obtaining reasonable assurance for all its key performance indicators (KPIs), demonstrating a commitment to transparency and accuracy.
In summary, ESG assurance is no longer a niche practice—it’s a strategic imperative for companies navigating the complexities of sustainability reporting. As the CSRD looms, organizations must collaborate, align their assurance efforts, and choose their partners wisely to meet stakeholder expectations and drive positive change.
Reference website:
https://esgnews.com/79-of-companies-now-obtain-external-assurance-over-some-esg-metrics-kpmg/