The power of ESG assurance: greater trust, lower risk

As sustainability reporting becomes standard practice, independent assurance is essential to ensure credibility. ESG assurance has evolved into a strategic tool that strengthens trust, mitigates risk, and supports sustainable value creation. Steven Mulkens and Margaux Mamdy, Partner and Manager ESG Reporting & Assurance at KPMG, share why ESG assurance is no longer optional for forward-looking organizations.

Mulkens: ‘Companies are increasingly reporting on their sustainability strategies and performance, driven by regulation as well as expectations from investors, banks, employees, and customers.’

Mamdy: ‘The credibility of this reporting depends on independent verification. ESG assurance is the process by which an external party, such as KPMG, reviews the reported information and provides an independent opinion.’ 

Mamdy: ‘An assured sustainability report strengthens credibility and reduces the risk of greenwashing. Studies such as the KPMG ESG Assurance Maturity Index show that business leaders clearly associate assurance with tangible benefits, including improved returns and profitability, increased market share, and better-informed business decisions.’

‘Independent verification also helps organizations identify inefficiencies, business risks, and potential disruptions at an earlier stage. This prevents unnecessary costs and enables companies to focus resources on the initiatives that matter most. In addition, it enhances reputation and strengthens trust among customers and investors, who are increasingly embedding ESG objectives and criteria into their strategies and decision-making.’

Mulkens: ‘While the Corporate Sustainability Reporting Directive (CSRD) and the EU Sustainability Reporting Standards (ESRS) impose strict reporting requirements, many companies are currently exempt following recent EU adjustments, or may no longer fall within the scope of the CSRD. As a result, they are turning to the VSME standard (Voluntary Sustainability Reporting Standard for SMEs)—a simpler and more flexible voluntary framework that helps organizations systematically identify their impacts and financial risks. It can also serve as a ‘value chain cap’, limiting the extent of information requests from CSRD-in-scope companies.

Now that parts of the CSRD have been postponed, voluntary reporting is becoming even more important. While VSME delivers valuable insights, independent validation is recommended to further strengthen the credibility and reliability of the reported information.’

Mamdy: ‘Assurance increases the confidence of investors and banks, alleviates concerns around greenwashing, and improves access to capital. Customers and suppliers also expect reliable data for their own reporting and value-chain decarbonization efforts. This creates a competitive advantage while strengthening reputation and market position.’

Mulkens: ‘An assurance process follows the same logic as a financial audit: planning, risk assessment, and reporting. However, the underlying ESG reporting processes are generally less mature, and the requirements are complex and evolving rapidly, requiring continuous monitoring.’

Mamdy: ‘In addition, many organizations struggle with limited data availability or challenges in data collection. Information is often spread across multiple sources and systems, while internal skills and experience to interpret and assess ESG data are frequently lacking. Digital tools to record, collect, and validate data are also not always in place.’ 

Mamdy: ‘Start early and work with a clear roadmap. Involve the assurance provider at an early stage and establish strong governance to enable efficient collaboration across internal functions. Strengthen your control processes and digital tools, and look beyond regulatory compliance to focus on the strategic value of reliable ESG information.’

This article was created in collaboration with De Tijd and L'Echo.