International evidence of changing assurance practices for carbon emissions disclosures

Abstract

Purpose The market for the assurance of carbon emissions disclosures is showing intensive growth. However, due to the largely voluntary nature of carbon reporting and assurance, there are currently no clear standards or guidelines and little is known about it. The purpose of this paper is to examine the reporting and assurance practices for carbon emissions disclosures. Design/methodology/approach This study provides evidence on this market, with a sample that includes 13,419 firm-year observations across 58 countries between 2010 and 2017 from the Carbon Disclosure Project (CDP) database. Findings The results show that the demand for carbon emissions reporting comes mainly from North America, the UK and Japan. Recently, markets such as South Africa have also shown increased demand for carbon reporting. The data also shows that more firms are seeking assurance for their carbon emissions reports. Legitimacy, stakeholder and institutional theories are used to explain the findings of this study. Research limitations/implications The results have important implications for firms that produce carbon emissions disclosures, assurance service providers, legislators, regulators and the users of the reports and there should be more specific disclosure guidelines for level and scope of reporting. Originality/value Amongst the firms that do provide assurance on their carbon emissions reports, a majority do so using specialist assurance providers, with only limited assurance being provided. The results further show that a myriad of assurance frameworks is being used to assure the carbon emissions disclosures.

Reporting and Assurance of Climate‐Related and Other Sustainability Information: A Review of Research and Practice

“…Datt et al. (forthcoming) reported a 62.8% assurance rate on carbon emissions disclosures with a clear upward trend during the sample period. The trend also indicates that accounting firms are being hired increasingly more often (35.4%); however, specialist firms still dominate the market (47.9%).…”

“…(2016), Datt et al. (forthcoming) rely on survey data from CDP without examining the assurance reports. However, Green and Zhou (2013) and Zhou et al.…”

“…Datt et al. (forthcoming) provided more updated information on the assurance practices for carbon emissions disclosures across 45 563 firm‐year observations from 2010 to 2017. Unlike Green and Zhou (2013) and Zhou et al.…”

Sustainability reporting in Africa: A systematic review and agenda for future research

“…Despite the fact that the practice of ensuring sustainability reports is largely voluntary, only a small number of businesses in African nations undertake it because of their corporate cultures, to eliminate information asymmetry, or to demonstrate their care for social and environmental issues. Datt et al (2021) argued that assurance specialization depends on the country where the company is located.…”

Corporate governance and the use of external assurance for integrated reports

“…For ESG reports to be relevant for investors and other stakeholders, the information they contain must be reliable. Consequently, as the use of ESG reporting grows, so too does the demand from investors, regulators, and other stakeholders for these reports to be subject to what this paper refers to collectively as “ESG assurance” 1 (Adams & Evans, 2004; Datt et al, 2021; KPMG, 2020; Simnett et al, 2009).…”