Assurance on CSR/Sustainability reporting
4. Assurance on CSR/Sustainability reporting
a) In recent years there have been a growing number of organisations voluntarily reporting on their non-financial performance. KPMG’s International Survey of Corporate Responsibility (2011: 6) found that: ‘95% of the 250 largest companies in the world (G250 companies) now report on their corporate responsibility (CR) activities, 66% of non-reporters are based in the US.’ There has been a growing trend in companies (especially in Europe) wanting to show a focus not only on achieving the ‘corporate bottom line’ but corporate social responsibility. According to the GRI Sustainability Reporting Guidelines (2006:38), assurance is an important part of CSR reporting used to verify the quality and accuracy of reports.
However, there is no clear consensus on the issue of whether information in Sustainability Reports needs to be verified with the same rigour that financial statements are. Auditing financial statements is a compulsory part of financial reporting because it pertains to the credibility and therefore usefulness of financial information to stakeholders. The question then becomes why is CSR Reporting assurance not compulsory? Is it less important to verify CSR reports or are there other underlying reasons that complicate the issue of assurance? The discussion below will address the points above as well as give a few case examples.
Proponents of assurance have raised some arguments in favour of verifying Sustainability Reports. Power (1997) argues that assurance processes motivated by ‘true’ accountability to stakeholders should, “enlighten, inform, and enable criticism and substantive change.” According to O’Dwyer and Owen (2005) from a legitimacy theory view point, if companies desire to maintain their license to operate, then verification of voluntary social and environmental reporting represents an important element in this legitimisation process. Thus the main purpose of social and environmental reporting
a) In recent years there have been a growing number of organisations voluntarily reporting on their non-financial performance. KPMG’s International Survey of Corporate Responsibility (2011: 6) found that: ‘95% of the 250 largest companies in the world (G250 companies) now report on their corporate responsibility (CR) activities, 66% of non-reporters are based in the US.’ There has been a growing trend in companies (especially in Europe) wanting to show a focus not only on achieving the ‘corporate bottom line’ but corporate social responsibility. According to the GRI Sustainability Reporting Guidelines (2006:38), assurance is an important part of CSR reporting used to verify the quality and accuracy of reports.
However, there is no clear consensus on the issue of whether information in Sustainability Reports needs to be verified with the same rigour that financial statements are. Auditing financial statements is a compulsory part of financial reporting because it pertains to the credibility and therefore usefulness of financial information to stakeholders. The question then becomes why is CSR Reporting assurance not compulsory? Is it less important to verify CSR reports or are there other underlying reasons that complicate the issue of assurance? The discussion below will address the points above as well as give a few case examples.
Proponents of assurance have raised some arguments in favour of verifying Sustainability Reports. Power (1997) argues that assurance processes motivated by ‘true’ accountability to stakeholders should, “enlighten, inform, and enable criticism and substantive change.” According to O’Dwyer and Owen (2005) from a legitimacy theory view point, if companies desire to maintain their license to operate, then verification of voluntary social and environmental reporting represents an important element in this legitimisation process. Thus the main purpose of social and environmental reporting
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