Independent Assurance on Sustainability/ESG Reports

Assurance engagements are generally classified into two aspect:

Reasonable Assurance

The assurance provider obtains reasonable assurance when performing the engagement. In the context of assurance engagements, reasonable assurance (a high but not absolute level of assurance) is achieved when the assurance provider expresses an opinion about whether the subject matter as measured or evaluated against the criteria is free from material misstatement. Reasonable ESG assurance demands a greater understanding of internal processes and controls. It requires the auditor to check metrics and disclosures, tracing them to their source to confirm accuracy. 

Limited Assurance

Engagement is performed to obtain limited assurance and a conclusion is expressed on whether any material modifications should be made to the subject matter in order for it to be in accordance with the criteria. Review engagements consist of more limited procedures that result in a meaningful but lower level of assurance when compared to reasonable assurance engagements.

The procedures performed in a limited assurance engagement are less in extent than for a reasonable assurance engagement and thus, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Limited assurance relies more on representations made by the company’s management team as an information source. It entails less verification to source documents as compared to a reasonable assurance engagement, a less detailed understanding of processes and controls and a lower level of scrutiny of source data and topics to include in the report.  The choice of assurance work is often subject to the practitioner’s professional judgement.