Audit and assurance – the gap between sustainability and financial reports

With changes to the ASX Governance Principles and Recommendations now in play, the focus will be on how companies elect to respond. In particular how they report on Recommendation 7.4, which asks them to disclose their material exposure to economic, environmental and social sustainability risks and how they are managing those risks.

Also of interest will be the level of accountability and transparency they apply to disclosure.

While financial performance data is thoroughly audited prior to release, the same rigour is not usually applied to sustainability information.

That’s the finding of our new research into the State of Sustainability Assurance, which shows that while 75 per cent of the ASX 200 provide some form of reporting on their sustainability performance, only 29 per cent of those companies are having data assured.

Those companies that are having their data assured are providing their stakeholders with robust information about their sustainability performance.

The research, which examined sustainability reports released in 2013, did find an increase in the number of companies reporting sustainability performance, something we would hope will increase given the new ASX requirement.

We would also hope that companies see the value in providing investors and other stakeholders with assurance that their sustainability information is as transparent and robust as their financial data, rather than making assertions that may or may not be fact.

To read the full report, including emerging trends in assurance, see our reports page.