Navigating ESG assurance in the FTSE100

In 2023, 79% of companies obtained assurance¹, marking a 4% increase from 2021. This means the vast majority of the FTSE 100 have at least some experience of the requirements of an assurance process, such as understanding the importance of providing accurate information to the assurance practitioner.

Collaboration across different teams within a company is vital to support a smooth reporting and assurance process and we expect this to become more important as companies begin to report under the CSRD.

Our data shows that 47% of companies that obtained ESG assurance in 2023 used the same practitioner for both ESG assurance and financial statement auditing. This is a significant 14% increase from 2021, reflecting a trend we expect to continue in the next few years as the CSRD comes into force. This is due to the level of detail and disclosures required for the European Sustainability Reporting Standards (ESRS) that is likely to have overlap with the auditor knowledge and processes. For example, ESRS Topical Standard G1 requires disclosures related to an entity's risk assessment and control environment, which, in providing assurance over, may have some overlap with work performed during a financial statements audit.

63% of companies that obtained assurance in 2023 received it from a “Big 4” accounting firm, representing an 8% increase from 2021.

As the reporting and assurance requirements increase for the largest UK companies, more companies may seek alignment between their assurance and audit practitioner.

In 2023, 52% of the assurance reports were signed on the same day as the financial statements audit report. Currently, some companies publish separate sustainability reports and metrics that are assured after the Annual Report is issued. However, under CSRD, the sustainability statement, which is subject to assurance, must be presented within the Annual Report itself. Companies that do not currently receive assurance at the time of publishing their Annual Report need to plan ahead to meet this requirement.

As expected, the majority of the ESG assurance reports in 2023 were for limited assurance. 94% of the reports signed provided limited assurance, 5% were hybrid² and just one company obtained reasonable assurance for all its assured KPIs.

For context, reasonable assurance work follows a similar methodology to an audit, involving understanding of the company and its culture, identifying risks, undertaking detailed testing, evaluating the evidence obtained and forming an assurance opinion. This type of assurance report is positively phrased, such as “in our opinion, the report is properly prepared, in all material respects, in accordance with..

Limited assurance follows the same methods as reasonable assurance but with a lower level of assurance, meaning the procedures performed are less extensive. This type of assurance report is negatively phrased, such as "nothing has come to our attention..."

For guidance and support on your ESG assurance journey, contact our ESG assurance team.