The Current State and Future Implications of Environmental, Social, and Governance Assurance

Abstract

This study examines environmental, social, and governance (ESG) reports of companies on the Wall Street Journal’s and Investor Business Daily’s top 100 sustainable companies. We collect information on whether the reports are assured, the type of assurance and standards cited, the assurance provider, and whether or not the provider also audits the financial statements. 58 percent of sample companies voluntarily sought external assurance services for some portion of these reports, with limited assurance primarily provided. Big 4 firms provide assurance for most international companies, but assure only 16 percent of U.S companies. We discuss practical implications and future research areas, including cross-country comparisons, ESG assurance, and standard-setting.

IFRS and ESG Disclosure in Indian Corporate Sector

“…Few of the studies (Alareeni & Hamdan, 2020; Rahman et al, 2023) document a positive relationship between MVBV and ESG. It is observed that the accounting numbers of Big 4 clients contain more value-relevant financial measures and assurances to shareholders than those of non-Big 4 auditors (Bakarich et al, 2023; Lin et al, 2009). Similarly, Burke et al (2019) find that negative ESG-related media coverage is associated with a higher likelihood of auditor resignation and increased audit fees.…”

Research on extended external reporting assurance: An update on recent developments

“…The quality of assurance statements based on the industry-adjusted composite score mentioned above is low and does not differ significantly between Australian and New Zealand companies. Bakarich et al (2023) analyze assurance practices related to the 2020 ESG reports of companies on The Wall Street Journal's list of the top 100 sustainably managed companies and Investor's Business Daily's 100 best ESG companies of 2021 (yielding a final sample of 194 companies). The findings reveal that 58% of the reports are assured.…”

“…Bakarich et al (2023) analyze assurance practices related to the 2020 ESG reports of companies on The Wall Street Journal's list of the top 100 sustainably managed companies and Investor's Business Daily's 100 best ESG companies of 2021 (yielding a final sample of 194 companies). The findings reveal that 58% of the reports are assured.…”