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On external assurance

This week we want to provide an updated answer to a question we frequently get: is it worth it to get external assurance for ESG data/reports? In short, yes. It is worth it.

Why? Here are 5 of our strongest reasons:

  1. Credibility and Trust                                                                                                                                External assurance ensures an unbiased review. When stakeholders see that a company’s sustainability data has been independently verified, it can boost their confidence in the information presented. As companies increasingly report ESG performance, the credibility and reliability of this data come into sharp focus.

 

  1. Data Accuracy and Quality                                                                                                                  Assurance providers help to identify discrepancies, errors, or areas for improvement. This meticulous review helps organizations enhance the accuracy and quality of their data. As a result, companies can better understand their actual performance, set better goals, and develop more effective strategies.

 

  1. Regulation                                                                                                                                                      Many governments and regulatory bodies are introducing mandatory sustainability reporting requirements globally. Independent assurance is often a key component of these frameworks.

 

  1. Mitigating Risks                                                                                                                                    Inaccurate or misleading sustainability reporting can lead to significant risks, including reputational damage, legal repercussions, and financial loss. External assurance helps to identify potential data issues before they escalate. With it, companies can take corrective actions and avoid the negative consequences associated with faulty reporting.

 

  1. Driving Continuous Improvement                                                                                                                  The process of obtaining external assurance fosters a culture of continuous improvement. Assurance providers often offer insights and recommendations on best practices and areas for enhancement.

 

Despite all of this, external assurance is still not always done. According to our ESG Development in the Public Equity Market 2023 report, in Mexico only slightly more than half the companies get this external check. In a recent report, KPMG mentioned that while 100% of companies they surveyed across the globe anticipate being required to provide ESG disclosures under at least one, and often multiple, sustainability reporting standards over the next 1-2 years, less than 30% of them are ready for assurance requirements. We would bet that we will see an uptick in external assurance of sustainability reporting in the future.

I hope you found this interesting. As usual, if there is anything we can help you with, or if there is an ESG topic you would like to know more about, please let us know.

 

Best,

Marimar

CEO, Miranda ESG

Contacts at Miranda Partners

Damian Fraser
Miranda Partners
damian.fraser@miranda-partners.com

Marimar Torreblanca
Miranda-ESG
marimar.torreblanca@miranda-partners.com

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