Assuring reliability

18th January 2017

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Mark Saunders

Nigel Leehane explains how a new standard could improve the reliability of information in corporate environmental reports

More organisations are publishing annual reports of environmental performance. Whether these are standalone environmental audits, corporate responsibility reports addressing broader elements of sustainability, or are published within the annual financial statements, their audience needs to have faith in their content – which is far from a given.

Although many organisations claim conformance to the reporting principles enshrined in various standards and protocols, some observers question the reliability of these disclosures and suggest their credibility could be enhanced by reliable external assurance.

The International Organization for Standardisation (ISO) has recognised this gap by initiating the development of a new standard (ISO 14016) on the ‘verification and validation of the environmental component of sustainability reports’.

The challenges for assurance

The Global Reporting Initiative (GRI), which has developed perhaps the best-known benchmarks for sustainability reporting, acknowledges that, although assurance standards have started to emerge, they vary in approach and are not adopted universally. To help reporters to understand the concepts and practices in external assurance the GRI published a guide in 2013. The External Assurance of Sustainability Reporting ( acknowledged that, as well as various national standards for assurance, there were two commonly referenced international benchmarks:

  • The International Standard on Assurance Engagements (ISAE) 3000, which is used worldwide by the accountancy profession to verify anything other than financial information. The standard establishes a process for assurance engagements, which aim to give intended users greater confidence in the information. There are two levels of assurance: reasonable and limited. These relate to the degree of risk in the conclusions of the engagement.
  • The AA1000 Assurance Standard provides a framework for an assurance process for sustainability consultancy AccountAbility’s principles standard and stakeholder engagement standard. AA1000 encourages organisations to engage stakeholders in developing a sustainability strategy and to ensure that disclosure addresses material stakeholder concerns. The AA1000 process also establishes assurance levels of high and moderate.

As well as ISAE 3000 and AA1000, other standards are sometimes cited as providing the basis for verification of disclosures. One of these is ISO 14064 Pt 3: Greenhouse gases — specification with guidance for the assurance of greenhouse gas statements. Although not aimed at corporate report verification, it does provide useful guidance that can be applied to assurance. Another is the EU Eco Management and Audit Scheme (EMAS).

Other approaches to reporting and verification are promoted by the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB), among others. The WBCSD has developed an assurance maturity model. This helps organisations to identify their objectives for assurance in relation to their maturity, not only in reporting but also in their strategic approach to sustainability. Recognising the complexity of the assurance standards landscape, the WBCSD report, Generating Value from External Assurance of Sustainability Reporting (, urges standards developers to establish ‘dialogue between themselves to ensure the convergence of the various initiatives’.

A new standard

Concerns about reporting quality, the effectiveness of assurance or verification, and the perceived lack of a unifying standard for verification prompted the ISO to establish a group to explore the issue. In 2014, the group conducted a survey through the ISO’s national member bodies, including BSI in the UK. More than 370 individuals involved in reading, producing, contributing to or verifying reports responded – and verification drew wide support. Respondents agreed strongly that the objectives of external verification should be to ensure greater accuracy and completeness. Fewer agreed that external verification or assurance delivered this, indicating dissatisfaction with current approaches. The survey results also revealed strong support (more than 70%) for a new verification standard. Respondents indicated that this should focus on principles, objectives and techniques for verification, plus verifier competence.

The ISO group then drew up a proposal for a new standard, and national member bodies endorsed its development in July 2016. The working group responsible for developing 14016, known as WG6, met formally for the first time in December and is aiming to publish it by July 2019. It faces many challenges.

The apparently haphazard use of the terms ‘assurance’ and ‘verification’ in this article is intended to reflect both their application in various standards as well as the concerns about the reliability of ‘reasonable’ and ‘limited’ assurance in ISAE 3000. The ISO is also starting work on a separate standard, the 17029, Conformity Assessment – general requirements for bodies performing validation and verification activities. This could ultimately be applied to organisations undertaking the assurance of reports.

A key objective of 17029 is to develop a common understanding on how to use the terms ‘verification’ and ‘validation’. In the context of corporate reporting, verification would relate to checking data and the data collection processes. Validation, meanwhile, would apply to ensuring that the intended use of the information met expectations, such as providing reliable data on material issues. The early draft of 14016, developed at the December meeting, explains how these newly defined verification and validation processes would be applied to deliver effective assurance. This will be a key issue for WG6 as the standard develops, and it is likely that the title of 14016 will become ‘assurance’, rather than ‘verification and validation’ of environmental reports.

The approach to establishing an acceptable level of assurance will also pose challenges. Users of reports want to be confident that the information in them is reliable and expect that the external assurance process will be adequate. This places a burden on assurers to deliver that expectation at a cost acceptable to report producers. Potentially a new approach is needed to define levels of assurance, such that users can better appreciate the degree of reliance they can place on the report.

As they stand, the standards generally lack robust requirements or guidance for determining the competence of those in the assurance process. Although they may rely on a form of professional accreditation, they overlook technical subject matter or sector expertise. The new ISO standard will need to address competence requirements for an assurance assignment and also how qualified are the individuals who carry it out.

Given the complexity of the issues and the range of stakeholder groups involved, it is important that WG6 attracts experienced and diverse participation. As well as individual experts from the different stakeholder groups, including reporters, users and assurers, it is vital that there is a form of liaison with the assurance standards bodies and representative entities such as WBCSD.

Formal remit

The formal remit of WG6 is to develop a standard for the verification and validation of the environmental component of sustainability reports. Given the sharper focus on broader reporting of other areas of sustainability, including social and community issues, human rights and worker welfare, is there an argument for extending the scope of the standard beyond environment? Even if its formal scope is not widened, the principles could be applied to the other elements of environmental, social and corporate governance.

The new standard will go through many drafts over the next three years, with progressively wider consultation. By the middle of next year, some should be circulated to ISO member bodies for comment, and by 2018 for public comment. As always, IEMA will seek to canvass the views of its members to feed into the development process.

Nigel Leehane is technical director at SLR Consulting. He is acting convenor of the ISO working group developing 14016. The views expressed in this article are his own and are not necessarily representative of the formal ISO position.

Drivers for reporting and reliance

Several drivers are encouraging more organisations to publish reliable annual environmental reports. These include:

  • Rapid growth in the requirements of global stock exchanges for the reporting of environmental information. Although these may not require external assurance, reporters are encouraged to seek it – for example, in its new guidance to reporters, the Singapore Exchange explains that external assurance adds credibility. The UN Sustainable Stock Exchanges Initiative (UNSSEI) is encouraging bourses worldwide to establish sustainability reporting requirements. It has 60 partner exchanges that have made commitments to this or have implemented rules or published guidance.
  • Expectations from the investment community. More investors are taking decisions based on factors other than current financial performance. They are interested in how companies are prepared to manage risks and opportunities that may influence future financial performance, and increasingly this includes capabilities to address environmental and other sustainable development issues. The guidance from the UNSSEI states: ‘Interest in externally assured ESG disclosure, along with the development of accompanying assurance standards, has been driven by investor requests for companies to bring ESG information up to financial grade reporting.’
  • Increased regulatory pressure. A report by KPMG, the Global Reporting Initiative (GRI), the United Nations Environment Programme, and the Centre for Corporate Governance in Africa identified almost 250 mandatory sustainability reporting instruments worldwide. These include regulations, codes of practice and standards, some focusing on specific environmental or social information, and others addressing broader sustainability reporting. The report, Carrots & Sticks – global trends in sustainability reporting regulation and policy, published in May 2016, emphasises that many of the instruments are based on or linked to voluntary reporting frameworks, such as the UN Global Compact principles, ISO 26000, OECD Guidelines for Multinational Enterprises and the GRI standards.

The need for reliable data as the basis for decision-making. Organisations themselves recognise that their own decision-making should be underpinned by reliable information on current and projected performance as well as stakeholder concerns. Although there is no requirement for external verification, the communications clause in ISO 14001: 2015, the international standard for environmental management systems, adds weight to the need for reliability of disclosures. It states: ‘The organisation shall ensure that environmental information communicated is consistent with information generated within the environmental management system and is reliable.’


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