Despite the spread of ESG disclosures in the corporate reporting of global companies (and even despite the appearance in the hands of auditors of reliable tools for their audit), a report from the U.S. Center for Audit Quality (CAQ) shows that so far very little public companies give this data for verification to auditors. At least, such conclusions can be reached, given the practice of U.S. companies.
U.S. researchers have analyzed publicly available data on the environmental, social and governance aspects of the large S&P 500 companies. And it turned out that about 95% of large U.S. businesses have detailed ESG information. Interestingly, these data are not even included in the mandatory reporting sent to regulators from the SEC (Securities and Exchange Commission). They are usually published in a separate report or on a corporate website.
It turned out that only 6% of S&P 500 companies confirmed the reliability of their additional reporting (at least part of it), involving an audit firm. At the same time, much more formal methods of verification were used by much more organizations – more than half of the representatives. Confirmation can be obtained not only with the help of a professional audit firm, but also with the involvement of an outside structure that is consulting (or engineering) firm.
“We expected that auditors of public companies would not be the only sources of assurance,” said Dennis McGowan, vice president of the CAQ professional practice team. But this may not be the case for long. So far, the audit is an initiative of the market itself, but if the Securities and Exchange Commission requires public companies to provide additional ESG disclosures on a mandatory basis, the audit of the statements will become more formalized, and then we can expect a hogging of the blanket by professional audit firms.