Benchmarking Sustainability Assurance in the ASX 100
Wednesday, 28th November 2012 at 9:54 am
Assurance of sustainability reporting by Australian Securities Exchange (ASX) 100 listed companies is slowly improving but there is still a long way to go, a benchmarking report has revealed.
Unlike financial reporting, sustainability reporting is not compulsory for ASX corporations. This has lead to the slow take up of voluntary reporting and only a relatively small proportion of those reports produced each year are ‘assured’ by independent third parties, the report said.
The report, produced by the Net Balance Foundation in collaboration with the Association of Chartered Certified Accountants (ACCA) called ‘2011 State of Sustainability Assurance in the ASX100’ was launched in Melbourne by Net Balance associate Nadia Woodhouse.
It was followed by a panel discussion with Net Balance Director Robyn Leeson, Global Reporting Initiative, Victoria Whittaker and ANZ Group Head of Sustainability, Toby Kent.
“The ASX has a long way to go in terms of the uptake of assurance,” Woodhouse said.
“Europe is leading the way in terms of assurance.”
Spain, Austria and Denmark lead the way in sustainability reporting over the 2002-11 period, with Australia coming ninth on 23%.
Australia is the highest ranked non-European nation in percentage of assured reports by corporates, followed closely by South Africa on 21%.
According to the report, the results of the analysis undertaken can be summarised as:
While the application of sustainability report assurance in the ASX 100 is generally low, this trend is reflected globally. In Australia, which is within the top 10 countries for report assurance, only half the ASX 100 companies obtain assurance over sustainability reports. This reflects the current voluntary nature of reporting.
Of the five largest industry groups in the ASX 100, the Banking and Telecommunications groups had the highest take up of assurance while the Commercial and Professional Services group lagged behind the average of the index. (However Woodhouse pointed out that there was only one telco in the ASX100, skewing the stats as to why 100% of this sector reported).
The authoring of assurance statements was evenly spread between accounting firms (such as Ernst and Young, KPMG, Deloitte and PwC) and specialist consultancies.
The most commonly used standard for assurance was ISAE3000/ASAE3000 (44%) followed by the AA1000AS (21%). In 15% of assurance statements the two standards were used in conjunction with each other.
The most common level of assurance provided was ‘moderate’ or ‘limited’ rather than a ‘high’ or ‘reasonable’ level (including statements with mixed levels of assurance for varying subject matter), which was only attained by 18% of companies that sought assurance. Of the 84 sustainability reports lodged in Australia only 64 were ‘comprehensive’ and only 30 of these were assured.
- Recommendations on how companies can improve performance were provided in approximately 30% of statements. The most common themes were improvements in systems and processes and improvements in the identification of material issues selected for reporting. Improvement to data collection and data management systems was also a common theme as was greater transparency.
You can access the report from this site when it is made available.