The majority of large public companies are now reporting environmental, social and governance information, while turning to auditing firms and other providers for assurance to vet the data.
The Center for Audit Quality released its
Meanwhile the percentage of companies that used a public company auditor to provide assurance also increased, although the majority are still using other assurance providers. Some 21% of companies that obtained assurance received it from public company auditors in 2022, up from 18% in 2021. The vast majority (95%) of companies that obtained assurance from a public company auditor in 2022 used the same firm that performed their financial statement audit. up from 90% in 2021.
The scope of information subjected to assurance has also increased. Most companies received assurance on their greenhouse gas emissions and at least one to three other ESG metrics, such as water, energy or waste metrics.
Most companies have a dedicated ESG page on their corporate investor relations website where they often disclose ESG information in a standalone PDF report. However, some companies issue ESG information in multiple separate smaller reports such as Sustainability Accounting Standards Board, Global Reporting Initiative or Taskforce on Climate-related Financial Disclosures indexes and/or reports. In 2022 there was an increase in the use of three of the four standards and frameworks (SASB, TCFD and GRI), with a slight decline in references to the Integrated Reporting Framework. SASB, GRI and TCFD remained the most frequently mentioned reporting frameworks or standards. Most S&P 500 companies (98%) disclosed some level of ESG-related information for periods ending in 2022, which is fairly consistent with the 99% of S&P 500 companies that did so in 2021. Some companies have designed an ESG interface web portal to disclose their ESG information as opposed to a separate report.
"The CAQ observed that 340 S&P 500 companies disclosed receiving some form of assurance or verification over certain of their ESG metrics in 2022, representing a 6% increase from the 320 companies that did so in 2021," said the analysis. "Seventy percent of the companies that reported ESG information in 2022 obtained assurance over certain of that information."
Public company auditors in the U.S. tended to use the American Institute of CPAs' attestation standards for their assurance engagements. Non-U.S. based public company auditors, used either the International Auditing and Assurance Standards Board standards, such as the International Standard on Assurance Engagements ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information or ISAE 3410, Assurance Engagements on Greenhouse Gas Statements) or the national assurance standard used in their own country. In one case, a U.S. public company auditor used both the AICPA attestation standards along with the IAASB assurance standards for an assurance engagement.
