Assurances

Financial Report Sustainability Report

The auditor’s report, provided by a public accounting firm, provides a professional opinion on the degree of accuracy of the financial statements and the extent to which they fairly represent the operations of the organization.

The securities commissions (regulatory agencies in various countries) require that organizations selling securities to the public must have an external auditor report on all financial statements.

Some financial institutions will also require an audit of financial statements before a loan is granted.

Some sustainability reports contain an assurance statement, similar to an auditor’s report, but involve a less extensive examination.

An assurance provider will conduct a review and provide an opinion on various sections of the report.  An assurance provider can be any of the following:

  • an internal auditor employed by the organization receiving the assurance;
  • an external auditor from a public accounting firm;
  • environmental consultant; or
  • other objective and independent party

Assurance statements are the output of a review that was undertaken to check the accuracy and fair representation of the information, but they are not required in sustainability reports as they are in annual reports containing financial statements.

Found only in sustainability reports, third party commentaries or stakeholder panels will discuss performance and how it could be improved.

Organizations just starting to report generally do not provide assurance statements as they need to gain more reporting experience and better develop their information systems before a thorough review can be done.

What Happens in Practice?

Air France, an aviation company in Europe, provides an assurance report from its statutory auditor, KPMG, an independent third party. Click here to view.
Canon, an imaging solutions company, provides third party (stakeholder) commentaries and the company response to the commentaries. Click here to view.
Fast Facts

How many companies have some form of assurance of the data in their reports?

  • 40 percent provide assurances (250 of largest companies providing reports)
  • 43 percent of assurances had recommendations for improvement (500 of largest corporations providing reports);

– Sources: CSR Trends 2010
KPMG International Survey of Corporate Responsibility Reporting 2008

What Stakeholders Say…about Assurances

Independent Third Party

“Assurances do not give a reader a 100 percent guarantee or comfort level that all the management systems are excellent, but they do give you a minimum amount of confidence that they are OK.”

“Those providing assurances must have training and experience of how data are collected on the environmental and social side. They must also have a thorough understanding of data accuracy, quality, and collection systems associated with some of the softer issues, like human rights and social integrity.”

Third Party Commentaries or Stakeholder Panels

“The multi-stakeholder assurance and actually getting “real people” not just “figureheads” or high-profile people, but also community members, those who are actually impacted by the company’s operations… so that would really lend a lot more credibility to the process of corporate sustainability reporting.”

“Stakeholder panels help the company with transparency. Transparency is being upfront in presenting all the facts. I think the more that companies present the negative side, trust is increased. If it is a glowing report then the average person would have less trust in the company.”

– Quotes from Stakeholders

Takeaway

Assurances in sustainability reports can be of two types:

  • formal assurance statements by independent third parties to ensure that the information is accurate; and
  • third party commentaries, or stakeholder panels, to help the organization improve its performance.

(See the Assurance module for more information.)