Sustainability Reporting Assurance in the ASX 100

by Nadia Woodhouse

Net Balance in association with ACCA, was pleased to launch the ‘State of Sustainability Assurance in the ASX100’ report in Melbourne on Tuesday 27th November.

At the launch, the report findings on recent assurance trends and insights into industry practices were presented. A copy of the report is available for download here.

The main findings of the research report were presented by Net Balance Associate Nadia Woodhouse and summarised as follows:

  • While the application of sustainability report assurance in the ASX 100 is generally low, this trend is reflected globally.
  • In Australia, which is within the top 10 countries for report assurance, only half the ASX 100 companies obtain assurance over sustainability reports. This reflects the current voluntary nature of reporting.
  • Of the 85 public sustainability disclosures in Australia only 64 were deemed to be ‘comprehensive’ and only 30 of these were assured.
  • The authoring of assurance statements was evenly spread between accounting firms (such as Ernst and Young, KPMG, Deloitte and PwC) and specialist consultancies.
  • The most commonly used standard for assurance was ISAE3000/ASAE3000 (44%) followed by the AA1000AS (21%). In 15% of assurance statements the two standards were used in conjunction with each other.
  • The most common level of assurance provided was ‘moderate’ or ‘limited’ rather than a ‘high’ or ‘reasonable’ level. 

The presentation of findings was followed by a panel discussion led by Net Balance Associate Director Kirsten Simpson with a number of leading industry experts including:

  • Toby Kent (Group Head of Corporate Sustainability, Australia and New Zealand Banking Group Limited)
  • Victoria Whitaker (Head of Focal Point Australia at Global Reporting Initiative (GRI))
  • Dr Robyn Leeson (Director at Net Balance and elected representative to GRI’s Technical Advisory Committee) and
  • Terence Jeyaretnam (Founding Director of Net Balance and Lead Certified Sustainability Assurance Provider). 

A digest of the informative panel discussion is given below.

Given the results of our research, what did you find disappointing and what were you pleasantly surprised by?

TJ – While the amount of take up of assurance is quite disappointing, it’s interesting that the use of the AA1000 standard is dropping, while the ASAE3000 increasing. Ultimately mixed use may be the way to go.

RL – it’s disappointing that the focus on assured datasets is on environment (which might be due to compliance obligations such as NGERs) and that Human rights assurance is low. It’s not a surprise, given that reporting frameworks for human rights are still under development.

VW – It’d be good to find out more – why industries choose certain frameworks for reporting, and whose responsibility is it to determine the standard/level of assurance?

TK – There seems to be some confusion over who the end users of assurance are, and perhaps there is a divide between reporting and communicating.

What are your predictions for sustainability assurance trends in the market place?

TJ – Reflecting on the pathways of financial assurance and the mandatory nature of some new non-financial regimes such as NGERS, I would expect to see a 100% take up of assurance in the future

TK – It is important for business to recognise the appropriate mix of internal and external assurance, and what will add value to the targeted stakeholders.

Toby, how has ANZ’s approach to assurance evolved and changed over the past few reporting cycles?

TK – ANZ currently uses 9 different assurance providers for various reporting processes – internally and externally. There are a number of engagements that continue on a rolling basis – on safety, for example.

Toby, can you shed some light on how ANZ responds to recommendations from assurance reports?

TK – The recommendations are absolutely valuable and ANZ uses these to shape future reports. It might be useful for reporters to disclose how they have responded to the assurance provider’s recommendations from the prior year.

Terence, from an assurance providers point of view, how valuable do you think assurance recommendations are and can you provide us with some examples of value generation?

TJ – What we are seeing is that reporters start to fully realise the benefits of recommendations 3-4 years into the assurance cycle, for example when system improvements have been implemented, and the board has started to become engaged. In our work for a large Australian conglomerate, we have been presenting our recommendations to the board for a number of years, and they have commented that recommendations are a valuable part of the public assurance statement. They are very bought in to the assurance and the sustainability reporting process.

Victoria, given we have recently seen the GRI G4 Exposure Draft, how do you think the new design features of G4 might be assured?

VW – The GRI’s position on assurance is unlikely to change. In terms of the G4, there is a shift to value chain reporting which means that assurance may be undertaken in a similar way, but it may be harder as providers need to start looking outside of the organisation that is reporting.

Robyn, how do you think the principles of Integrated Reporting will impact on the practice of sustainability assurance in the future?

RL – The IIRC is currently drafting some guidance on assurance so we will have to wait and see!

Nadia Woodhouse is a Senior Associate of Net Balance (nadia@netbalance.com), 
one of the world’s leading sustainability advisory firms.
Nadia is based in Melbourne.