GRI Conference - 27 May - Owen - Assurance Of Sustainability Reporting


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GRI Conference - 27 May - Owen - Assurance Of Sustainability Reporting

  1. 1. KEY ISSUES IN SUSTAINABILITY ASSURANCE Dave Owen International Centre for Corporate Social Responsibility Nottingham University Business School
  2. 2. Current sustainability assurance practice: A brief overview <ul><li>Significant rate of growth internationally </li></ul><ul><li>Increased use of Standards—notably ISAE 3000 and AA1000AS </li></ul><ul><li>Accounting firms (predominantly the ‘big 4’) are the main assurance providers </li></ul><ul><li>Accountants overwhelmingly provide limited assurance featuring negative form opinions </li></ul><ul><li>Assurance statements rarely specify an intended audience </li></ul><ul><li>Increased trend towards offering commentary on performance and recommendations </li></ul><ul><li>Stakeholder inclusion in the process is minimal </li></ul>
  3. 3. Current Assurance Practice: A brief critique <ul><li>Inconsistency in terms of objectives, scope and procedures </li></ul><ul><li>A large degree of management control over the exercise </li></ul><ul><li>Use of jargon and guarded phrases in assurance statements </li></ul><ul><li>Not much value-added for stakeholders </li></ul>
  4. 4. The Present Study <ul><li>Sponsored by the ACCA </li></ul><ul><li>Interviews with senior corporate responsibility managers from ten FTSE 100 companies </li></ul><ul><li>Interviews with three categories of stakeholder – the investment community (3); prominent NGOs’ (4); the trade union movement (1) </li></ul>
  5. 5. Key Aims of the Research <ul><li>Corporate Respondents: </li></ul><ul><li>Reasons for commissioning assurance </li></ul><ul><li>Factors underpinning choice of assurance provider </li></ul><ul><li>Scope and depth of assurance work desired </li></ul><ul><li>Level of resource committed to the exercise </li></ul><ul><li>Views as to necessary degree of stakeholder inclusion </li></ul><ul><li>Perceptions as to benefits accruing </li></ul>
  6. 6. Key Aims of the Research <ul><li>Stakeholder Respondents: </li></ul><ul><li>Perceptions of ‘value added’ to the reporting process by assurance </li></ul><ul><li>Level of involvement experienced and desired in assurance exercises </li></ul><ul><li>Views as to actual and potential efficacy of assurance in promoting stakeholder accountability </li></ul>
  7. 7. Major Findings <ul><li>From the Perspective of Corporate Interviewees </li></ul><ul><li>Assurance must provide value for money </li></ul><ul><li>Cost constraints preclude any major move towards reasonable assurance provision </li></ul><ul><li>Awareness of stakeholder detachment from the exercise, and a desire to bring about their more active involvement </li></ul><ul><li>Formalising stakeholder involvement by means of some form of stakeholder panel the favoured option (although many practical difficulties acknowledged) </li></ul>
  8. 8. Major Findings <ul><li>From the Perspective of Stakeholder Interviewees </li></ul><ul><li>A clear dichotomy of views as to whether assurance adds value to the reporting process: </li></ul><ul><li>Investment community – assurance not relevant in terms of their decision-making needs; more concern with issues of data integrity and synergy with financial reporting practice than stakeholder inclusion (although some support for Expert Panels) </li></ul><ul><li>Trade union official – reservations over practical competencies of assurance providers and the institutional legitimacy of the sustainability assurance industry </li></ul>
  9. 9. Major Findings <ul><li>NGO Representatives – broadly supportive of assurance (although aware of limitations); desired more involvement via participation in stakeholder panels (although concerns over domination of ‘big brand’ NGOs’, resource constraints and compromising of independence) </li></ul>
  10. 10. Some Corporate Governance Implications <ul><li>The issue of the addressee for assurance statements </li></ul><ul><li>Voluntary vs. mandatory reporting and assurance </li></ul><ul><li>No form of redress for stakeholders </li></ul><ul><li>The company’s success and longevity vs. society’s sustainable development needs </li></ul><ul><li>Assurance offers a technical solution to an essentially political problem </li></ul><ul><li>“ The government isn’t doing its job…At some point you have to get to the root of the problem” (trade union official) </li></ul>