The concern for environmental, social, and governance (ESG) issues has recently intensified throughout the world owing to heightened interest from stakeholders and governmental regulations. Given that organisations seek to practice sustainability and fair practices, they have adopted effective ESG reporting as part of their civilisations. Recently, KCB Bank, Absa, Safaricom, Standard Chartered, and Stanbic Bank launched their 2023 ESG and Sustainability Reports, which are a step further in their commitments to sustainability. To praise this trend, KCB’s active assumption of its inaugural ESG report brings out a critical change: embracing assurance in ESG reporting, which has never been a norm.

The rise of ESG reporting

Corporate reporting has changed in recent years. No longer seen as engagement with corporate social responsibility (CSR) programmes, ESG reporting has matured into a business conducted that considers environmental, social, and internal governance aspects in developing business strategy.

With the growing amount of ESG communication, the need for assurance is becoming more evident. This term refers to an evaluation of a company’s ESG profile that is done by independent third parties. It helps for a number of reasons.

Assurance plays a crucial role in enhancing the credibility of ESG reports. In today’s information-rich environment, stakeholders such as investors, customers, and regulators expect reliable information. Third-party assurance instils initial confidence in the authenticity of the information, as it is believed to adhere to the right framework, thereby improving the genuine image of ESG reports.

Another key reason for the growing need for assurance is the increasing regulatory requirements. As more countries mandate ESG disclosures, organisations are under pressure to meet these standards. Assurance services play a crucial role in this, helping businesses to comply with the law and mitigate legal risks, thereby demonstrating their commitment to regulatory compliance.

Apart from meeting the legal requirements, assurance is essential in risk management. By carrying out the assurance process, the organisation will be able to assess and fill in any holes or weaknesses in the content of ESG reports so that larger problems do not prevail.

Emphasising such measures prevents reputational loss as well as enhances the overall corporate governance.

Moreover, the assurance process can improve performance. Note that an independent reviewer’s empirical evaluation can be beneficial in terms of ESG and what more can be done to improve. This feedback assists businesses in improving their ESG performance through better alignment with their sustainability objectives.

Top assuring firms in ESG reporting

A number of organisations are currently at the forefront in rendering ESG reporting assurance; the companies have a wide range of activities that support the vouching of the performance reports. These include:

• KPMG is well known for its comprehensive range of audit and assurance services, including ESG/CSR reporting assurance. These capabilities assist corporates in improving the credibility of their sustainability reports.
• PwC provides an ESG assurance service that is bespoke to the sectors and operational geography of the clients and consistent with best practices. Their service is designed to assist companies in complying with the framework, the regulation, and the stakeholders in general.
• Deloitte offers businesses complete ESG assurance services, assisting in resolving complicated reporting issues and enhancing the companies’ sustainability policies.
• EY suggests relative effectiveness of ESG reporting mechanisms, introducing improvements which are neither mere compliance measures nor engaging in performance optimisation.

A path forward

It is worth noting that assurance becomes even more important when we look at how KCB, ABSA, Safaricom, Standard Chartered, Stanbic Bank, and other institutions have made great strides in enhancing their ESG reporting in 2023. This is not only the first for KCB since issuing assurance on its first ESG report is purely a demonstration of will, and it’s expected that others will follow suit.

To sum up, how much’s worth ESG reporting assurance was considered here cannot be underemphasized. For societies where trust and accountability are integral, independent verification of prepared documents states that the ESG disclosures are verifiable, correct, and relevant. Through assurance, companies enhance their image and reputation as responsible organisations in a society where alienable business practices are becoming scarce. Such diligence in verification and accountability is the only way forward if a balance and harmonious co-existence between business and its stakeholders is the desired future state.