73% of G20 companies now seek sustainability assurance

A growing majority of the world’s largest companies are seeking external assurance on their sustainability reporting, according to a new five-year analysis from the International Federation of Accountants (IFAC) and AICPA & CIMA.

The 2023 edition of The State of Play: Sustainability Disclosure and Assurance reveals that 73% of large companies across G20 jurisdictions engaged third parties to assure at least part of their sustainability disclosures — up from 69% in 2022, and a sharp rise from 51% in 2019, the first year of the study.

The most commonly assured information continues to be greenhouse gas (GHG) emissions, often forming the entry point for companies beginning assurance practices.

“Auditors have extensive education requirements, adhere to strict independence rules and possess a deep and holistic view of an organisation’s business, processes and risk profile,” said Susan Coffey, CEO of Public Accounting at AICPA & CIMA.
“That makes them ideal candidates to perform sustainability assurance engagements, and we’re seeing many boards and audit committees endorsing that view as corporate reporting matures.”

Audit firms remain dominant — but market share slips

Despite audit firms maintaining a 55% share of the global assurance market, their overall dominance has slipped from 58% in 2022. The report attributes part of the decline to the consolidation of assurance reports in regions like the EU, where statutory auditors increasingly provide single integrated reports covering multiple sustainability disclosures.

Conversely, consultants and non-audit firms remain active in greenhouse gas-specific assurance work — often producing multiple reports per client, particularly in markets like South Korea.

Nevertheless, audit firms made gains in several key regions. Increases in market share were recorded in:

• Singapore (+6 percentage points)
• South Africa (+4)
• United Kingdom (+5)
• United States (+5) — where audit firm assurance rose from 23% to 28%

Sustainability reporting increasingly integrated with financial accounts

The report also highlights the accelerating integration of sustainability data into statutory financial filings. More than three-quarters of companies now publish ESG information alongside their annual or integrated reports. Among these, the vast majority use their statutory auditor to verify the disclosures.

“The largest global companies have responded well to voluntary systems of sustainability reporting and assurance, driven by investor demand,” said Lee White, CEO of IFAC.
“With new global standards in place, regulators now have the toolkits to move from voluntary to mandatory disclosures over time, which we expect will further drive high-quality, consistent and comparable sustainability-related information.”

Reporting levels plateau at near-universal levels

The study found that 98% of companies disclose some form of sustainability data — a figure unchanged from 2022. The proportion of firms including sustainability in their annual reports has continued to rise, reaching 44%, up from 18% in 2019.

Five jurisdictions recorded double-digit increases in the uptake of sustainability assurance in 2023: Hong Kong, Indonesia, Mexico, Russia, and Saudi Arabia.

The report’s findings come amid increasing momentum towards mandatory ESG disclosure frameworks, with audit firms and accountancy bodies expected to play a growing role in providing trusted, independent assurance on non-financial information.