Sustainability and non-financial assurance

Turn a broad claim into an assessable statement

Non-financial reporting can explain an organisation's effects on people and resources, its service outcomes, or the factors supporting its future performance. Assurance becomes possible when a claim has an identifiable boundary, a reporting period and suitable criteria. A slogan such as “we operate responsibly” leaves too much unresolved. A statement identifying which activities were assessed, against which requirements and over which period gives the practitioner something to examine.

Begin with the decision the user needs to make. A lender considering resource exposure, a customer assessing a supplier and a community considering local water availability may need different information. An assurance conclusion on selected indicators cannot reasonably be read as approval of every aspect of the organisation's conduct.

This lesson follows the guide's 2024 study context. ISAE 3000 (Revised), and ASAE 3000 in Australia, provide the general assurance foundation. Subject-specific standards apply where appropriate. The IAASB's extended external reporting guidance was issued in April 2021; the August 2023 proposed ISSA 5000 was a separate consultation. The proposal is historical background here, not an operative requirement.

Concept sources: IAASB extended external reporting guidance, 6 April 2021, publication overview; Proposed ISSA 5000, 2 August 2023, exposure-draft publication — the two initiatives and their historical status.

Separate reporting frameworks from assurance standards

Reporting criteria tell the preparer what information to produce. Assurance standards govern the practitioner's work on that information. GRI 1: Foundation 2021 addresses reporting about impacts on the economy, environment and people. Its reporting principles include accuracy, balance, clarity, comparability, completeness, sustainability context, timeliness and verifiability. It encourages external assurance, alongside other credibility mechanisms, rather than making external assurance a universal condition of GRI reporting.

The revised GRI Universal Standards became effective for reporting from 1 January 2023. Describing the 2016 release as the latest version would therefore be inaccurate even within the guide's historical setting. IFRS S1 was issued in June 2023 with a 1 January 2024 effective date and an investor-focused information objective. An international standard's effective date does not itself establish that every Australian entity must apply it.

Concept sources: GRI 1: Foundation 2021, effective 1 January 2023, sections 1, 4 and 5.2; IFRS S1, June 2023 — official implementation overview, introduction — reporting purpose, credibility and historical dates.

A small organisation can need assurance for a specific tender or financing decision without issuing a large corporate sustainability report. For a catering supplier, reliable food-waste measurements might help a customer assess contract performance. For a community arts organisation, attendance and accessibility measures might inform a grant renewal. The engagement still needs a clear subject and evidence; a smaller entity does not make an undefined claim assessable.

Match evidence to the claim

The following examples distinguish evidence of an activity from evidence of its outcome. They are possible procedures, not a universal checklist.

For a claimed improvement, examine both ends of the comparison. A change in site coverage, measurement method or denominator can create an apparent improvement without any change in operations. Narrative claims also need evidence: a policy document supports the existence of a policy, while evidence of implementation involves what people actually did.

Concept sources: ASAE 3000, December 2022, paragraphs 24, 44–49 and A45 — suitable criteria, materiality and evidence; the business and procedures above are original applications.

Understand the greenhouse gas inventory before testing it

ASAE 3410 covers reasonable and limited assurance on GHG statements and supplements ASAE 3000. Its international counterpart is ISAE 3410. Greenhouse gases include more than carbon dioxide; other gases may be expressed as carbon dioxide equivalents. The criteria must resolve organisational boundaries, relevant gases, quantification methods and necessary disclosures. An unexplained exclusion can matter as much as an inaccurate calculation.

The GHG Protocol distinguishes direct emissions from owned or controlled sources, emissions from purchased electricity, and other indirect emissions. Apply the actual reporting criteria and version specified for the engagement. Do not assume that a company's chosen boundary covers every operation or value-chain activity a reader might associate with its brand.

Concept sources: ASAE 3410, December 2022, paragraphs 2–9, 14(n) and 16–18; GHG Protocol Corporate Standard, revised edition 2004, chapters 3–4 — assurance scope, gases and inventory boundaries.

Concept sources: GHG Protocol Corporate Standard, revised edition 2004, chapter 6, Identifying and Calculating GHG Emissions — measurement approaches; the warehouse, kiln, depot and cold-storage examples are original.

Combine assurance skills with technical expertise

An assurance practitioner brings evidence evaluation, control assessment, scepticism and reporting skills. An engineer, chemist or environmental scientist may bring the knowledge needed to assess a measurement method. These capabilities complement each other. The lead practitioner needs sufficient subject knowledge to take responsibility, and the team needs appropriate collective competence.

For an expert, evaluate competence, capabilities and objectivity; understand enough of the field to agree the work and evaluate its adequacy. A technically impressive report may address the wrong boundary, period or question. Nor does an expert's involvement eliminate the need to test material source data.

Concept sources: ASAE 3410, December 2022, paragraph 16; ASAE 3000, December 2022, paragraph 52 — team competence and practitioners' experts.

Recognise scheme-specific requirements

The guide's Australian setting includes the National Greenhouse and Energy Reporting Scheme, the safeguard mechanism, the Renewable Energy Target, the Emissions Reduction Fund and the Australian National Registry of Emissions Units. These are not interchangeable reporting obligations. The historical NGER audit framework supported several of these schemes, with the Clean Energy Regulator administering the framework.

Registration and eligibility depend on the relevant scheme and engagement. Being a financial statement auditor does not by itself establish eligibility for every greenhouse and energy engagement. Conversely, do not turn the guide's broad registration statement into a claim that every person on every assurance team must personally be registered. Establish the applicable requirements before acceptance.

Concept sources: Clean Energy Regulator Annual Report 2022–23, September 2023, pages 4, 8–9 and 43; Climate Change Authority, Review of the NGER Legislation consultation paper, 31 July 2018, sections 1.5–1.6 and 5.1 — historical regulatory architecture and scheme differences; this is background, not a statement of current registration rules.

Apply the water reporting boundary precisely

AWAS 1 addresses preparation and presentation of general purpose water accounting reports. The joint ASAE 3610/AWAS 2, issued in February 2014, addresses reasonable or limited assurance. Its coverage includes water accounting statements, note disclosures and the accountability statement; the contextual statement is outside its assurance conclusion.

Water reporting deals with quantities, rights, obligations and movements rather than simply the expense of buying water. Users may care about available water, allocations, flows and uncertainty. Methods can involve direct measurement or estimates, making both data quality and quantification expertise relevant.

The assurance standard specifically addresses future-prospects disclosures and unaccounted-for differences. An unexplained gap should not disappear into a balancing amount. Consider the underlying measurement processes and whether the report adequately explains the remaining uncertainty.

Concept sources: ASAE 3610/AWAS 2, 24 February 2014, paragraphs 5, 8–10, 15(k), 15(r) and 50–52 — criteria, scope and particular evidence issues. The Bureau's 2013 National Water Account reference list identifies the 2012 AWAS 1 publication.

Distinguish a reliable measure from a relevant measure

Performance measurement assurance can address the reported result, the relevance of the measure or the suitability of its criteria. These are different questions. A count may be accurate while measuring something that says little about the organisation's objective.

For example, a community translation service wants residents to understand local council notices. Counting enquiries might help plan staffing, but says little about understanding. Counting translated notices is closer to the service delivered, yet still needs a definition of a completed translation and a treatment for repeat requests. A balanced assessment might also consider delivery time, accessibility and whether recipients understood the action required.

Quantitative measures are often easier to compare, but qualitative information is not automatically unsuitable for assurance. It needs sufficiently clear criteria and evidence. Performance engagements concerning economy, efficiency and effectiveness have their own further requirements, discussed separately.

Concept sources: ASAE 3500, December 2022, paragraphs 22–23 — quantitative or qualitative performance criteria, including relevance, completeness, reliability, neutrality and understandability.

Read an integrated report as a connected explanation

Integrated reporting connects strategy, governance, performance and prospects with value over time. Its six capitals are financial, manufactured, intellectual, human, social and relationship, and natural. They help explain resources and relationships; they are not six mandatory monetary balances to audit.

The original framework was issued in 2013 and revised in 2021. The 2024 IFRS Foundation companion guide expressly explains the 2021 framework. Its use here is limited to those established concepts. An integrated report can combine financial results, operational measures, narrative judgements and future-oriented statements, so assurance scope must be stated precisely.

Concept sources: IFAC announcement, 10 December 2013; Transition to integrated reporting, 2024 guide to the 2021 framework, pages 2 and 5–6 — historical framework and six-capital perspective.

Difficulties arise when definitions are immature, systems cannot retain evidence, information spans long periods, or a narrative leaves out an important qualification. Good governance and internal controls can strengthen credibility, but their existence is not an external assurance conclusion. Explain what was assured, the criteria, the level of assurance and material limitations in the written report.

Sources and further reading

• ASAE 3410, December 2022: paragraphs 2–18 and 20–22.
• GRI 1: Foundation 2021: sections 4–5.
• ASAE 3610/AWAS 2, February 2014: paragraphs 15, 50–52 and 99–106.
• ASAE 3500, December 2022: paragraphs 22–23.
• IAASB extended external reporting guidance, April 2021: non-authoritative guidance publication.