To find out more on External Assurance, we invite you to read our brochure

Sustainability reporting is gaining momentum as there is stakeholders’ ever-rising demands for more transparent and better communication regarding the sustainability practises, initiatives and performance of companies and organizations. However, issuing a sustainability report is not always enough if an organization wants to gain credibility and trust. External Assurance is an essential step for those organisations that want to increase confidence in the quality of their sustainability content, data and processes portrayed in a report, as it provides an independent, third-party view of the thoroughness and relevance of the sustainability systems and approach.

Available Standards

A constantly rising number of organizations are disclosing social, economic and environmental performance information as part of their sustainability reporting process, in order to respond to user expectations and to meet regulatory requirements. These organizations can opt for one of two key assurance standards that are widely used – AA 1000AS and ISAE 3000. The AA1000 Assurance Standard (AA1000AS, 2008) with 2018 Addendum (the revised version will be launched in 2019) is the leading methodology used “to evaluate the nature and extent to which an organization adheres to the AccountAbility Principles”. The AA1000 Series of Standards are founded on the principles of:

  1. Inclusivity – People should have a say in the decisions that impact them
  2. Materiality – Decision makers should identify and be clear about the sustainability topics that matter
  3. Responsiveness – Organisations should act transparently on material sustainability topics and their related impacts
  4. Impact – Organisations should monitor, measure and be accountable for how their actions affect their broader ecosystems

The fourth principle (Impact) has been introduced as one of the recent advancements of the AccountAbility Principles (AA1000AP, 2018) on which The AA1000 Assurance Standard (AA1000AS, 2008) with 2018 Addendum are based on. There are two levels of AA1000AS (2008) assurance:

  1. A high level of assurance;
  2. A moderate level of assurance.

ISAE 3000, similarly to AA 1000AS, is the standard for assurance over non-financial information and it is issued by the International Federation of Accountants (IFAC). The standard consists of guidelines for the ethical behaviour, quality management and performance of an ISAE 3000 engagement. ISAE 3000 recognises two types of assurance engagement, the “reasonable assurance engagement” and “limited assurance engagement” to refer to the different nature, timing or extent of evidence-gathering procedures.

Although both standards are used for External Assurance they are built on different premises and take different approaches; AA1000AS is designed by sustainability professionals to focus on the quality of an organisation’s reporting and performance, with emphasis on materiality, impact, stakeholders and strategy. On the other hand, ISAE 3000 for “Assurance Engagements Other than Audits or Reviews of Historical Financial Information” is a standard for any assurance engagement focusing on procedures, terms of engagement and engagement performance. However, these two standards can be used together.

The value of External Assurance

Reporting organisations turn to External Assurance to validate that the disclosures made in their sustainability report are true and reliable. As such, External Assurance allows organizations to drive continuous improvement by strengthening their relations with stakeholders and implementing the necessary measures and recommendations suggested by the independent assurance provider who conducted the assurance. Today, sustainability reporting alone, is more often than not, not sufficient to make an organization appear credible in the eyes of its stakeholders, especially in certain industries with high stakeholder and regulatory pressures. Obtaining External Assurance should be a priority for organizations who want to enhance recognition and invest in trusting relations as well as confidently communicate their achievements. The purpose of External Assurance goes beyond a statement from a third party that the contents of a report are true based on certain principles; it enhances confidence about the integrity of information and of underlying operational processes and improves the quality of an organization’s decision-making process. Organizations should not separate the process of sustainability reporting from External Assurance but embrace both in order to achieve real and long-lasting growth.

To find out more on External Assurance, we invite you to read our brochure

Photo by Bud Helisson on Unsplash

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