ESG & Sustainability

Building an ESG Reporting Program That Survives Assurance

An assurance provider does not read your sustainability story. It picks a number and asks where it came from.

February 2021·2 min read·Synergy Nexus Advisory

How first reports get written

Many organizations produce their first sustainability report the way they produce a brochure. Communications drafts the story, and then someone is asked to find numbers that support it, which gives a result that reads well and gets published.

The trouble starts with the first request for third-party assurance, and reporting frameworks are moving that way. The European Union's CSRD requires assurance over sustainability statements, and investors using ISSB-based disclosures increasingly expect it.

What assurance tests

Assurance over sustainability information works much like a financial audit, in that the provider selects reported figures and tests whether each can be supported. A figure for emissions or injury rates has to lead back to evidence.

Exhibit 1: The three things an assurance provider looks for behind a reported figure.

Requirement	Question asked	What fails
Defined data source	Where did this number originate?	A spreadsheet with typed-in values and no source
Consistent method	How was it calculated, and was it done the same way at every site and in every period?	Sites using different boundaries or factors
Control process	Who checked it before publication?	One person compiling figures with no review

An organization that treated reporting as a writing task usually has none of the three, so even where the figures are right, they cannot be shown to be right.

Build the data layer first

Programs that pass assurance reverse the order, deciding what will be measured, how and by whom before any drafting begins.

A metric inventory listing each figure the report will contain.
For each metric, the source system or document and the person who extracts it.
A written method, including boundaries, units and any conversion or emission factors.
A review step by someone other than the preparer, with evidence that it happened.
A record of changes, so restated figures can be explained.

This is unglamorous work and it takes a reporting cycle or two to settle, but once it exists, the narrative is easy to write because the facts under it are firm.

A parallel from safety management

The same gap appears in management-system audits, where a document says one thing and the site does another. The remedy is the same too: check the claim against the source before an outsider does.

From the field

In one composite engagement, an upstream operator preparing for ISO 45001 certification verified every procedure against field practice and ran a mock audit first. It was certified with no nonconformities at Stage 2. Read the ISO 45001 case study.

A mock assurance exercise serves the same purpose for a sustainability report, and it can be as simple as picking a sample of figures, tracing them and fixing what cannot be traced.

Supply-chain emissions are the hardest figures to support, for reasons set out in Scope 3 emissions for industrial buyers.

Key takeaways

Pick three figures from your last report and trace each to its original source document.
Write down the calculation method for each reported metric, including emission factors and their source.
Assign a named owner to every metric and a second person who reviews it.
Hold the narrative draft until the data for the period has been collected and checked.

Practice area