Scrutinizing ESG Assurance through the Lens of Reporting

Abstract

This paper assesses whether and how ESG assurance relates to ESG reporting. Using textual analysis, I examine three reporting properties (materiality, verifiability, and objectivity) relevant to the objectives of ESG assurance across an international sample. I document positive associations between ESG assurance and all three reporting properties, lending support to the usefulness of the assurance practice. These associations strengthen with assurers' greater industry experience, companies' ESG-linked compensation, and companies' high negative ESG exposure. Further analysis of detailed assurance choices (level, scope, provider, procedure) reveals their varying association with the reporting properties, highlighting the distinctions between them. Finally, exploiting the implementation of the EU NFRD of 2017, I document the enforcement role of ESG assurance within a mandatory reporting framework, particularly when assurance criteria are clearly defined. Overall, this paper presents the first international large-scale analysis of detailed assurance choices and establishes a direct link between them and ESG reporting properties.

Keywords: ESG Assurance, ESG Reporting, Reporting Properties, Materiality, Verifiability, Objectivity, EU NFRD, Mandatory Reporting, Enforcement