Sustainability Assurance Research Articles

Sustainability Assurance Practices Among Public Listed Companies in Sri Lanka

In response to increasing stakeholder expectations, an increasing number of companies are reporting on their corporate social and environmental performance in addition to their normal financial measures. This trend will continue as will the need for providing assurance of this additional information and the systems and processes used to generate it. The purpose of this study is to provide an overview of sustainability assurance practices in Sri Lanka among the listed public companies. Data collection and analysis was carried out in two stages. First, the published annual reports of the companies listed in Colombo Stock Exchange as of March, 2015 were analyzed. Then unstructured interviews were carried out with assurance providers. Even though sustainability assurance is little practiced, there is an increasing trend for companies to obtain assurance from external assurance providers to ensure the credibility of the published reports. Furthermore most of the companies have obtained sustainability assurance from audit firms rather than from specialized consultants. Assurance providers mostly use SLSAE 3000 as the basis to provide these assurances. None of the companies were qualified enough to obtain reasonable assurance on sustainability reporting and only limited assurances were obtained. This study contributes to the advancement of knowledge of sustainability assurance practices in developing countries, taking Sri Lanka as the case.

How sustainability assurance engagement scopes are determined, and its impact on capture and credibility enhancement

PurposeThe purpose of this paper is to examine how sustainability assurance providers’ (SAPs) promotion of sustainability assurance influences the scope of engagements, its implications for professional and managerial capture and the ability of sustainability assurance to promote credible reporting.Design/methodology/approachThe authors conducted in-depth interviews with sustainability reporting managers (SRMs) and SAPs in Australia and New Zealand, using an institutional work lens to focus the analysis.FindingsAt the start of a new assurance engagement, SAPs offer pre-assurance and flexible assurance scopes, allowing them to recruit clients on narrow-scoped engagements. These narrow-scoped engagements focus on disclosed content and limit SAPs’ ability to add value and enhance credibility. During assurance engagements, SAPs educate managers and encourage changing the norms underlying sustainability reporting. At the end of the assurance engagement, SAPs provide a management report demonstrating added-value of assurance and encouraging clients broader-scoped engagements. However, with each assurance engagement, the recommendations offer diminishing returns, often leading managers to question the value of broad-scoped engagements and to consider narrowing the scope to realize savings. Under these conditions, client pressure (potentially managerial capture) along with practitioners’ desires to grow assurance income (potentially professional capture) can affect SAPs’ independence and the quality of their assurance work.Practical implicationsThe study implies that regulation mandating the scope of engagements may be called for.Originality/valueThe authors contribute to the research literature in several ways. First, the findings show how professional and managerial capture occurs before, during and at the end of the assurance process. The authors highlight how perceived value addition from sustainability assurance diminishes over time and how this impacts the scope of engagements (with implications for SAPs independence and the quality of assurance work). The authors show these findings in a table, clarifying the complicated interrelationships. Second, the authors contribute to theory by identifying a new form of institutional work. Third, unlike previous studies focused on SAPs, the authors provide insights from the perspectives of both SAPs and SRMs.

Determinants of voluntary sustainability assurance: the importance of corporate environmental performance

PurposeThe purpose of this study is to investigate whether corporate environmental performance (CEP) exerts any significant influence on the voluntary external assurance of sustainability reports.Design/methodology/approachThe sample of this study includes 176 firm-year observations covering an eight-year period (2008-2015) for listed Finnish companies that have issued sustainability reports during the sample period. As the dependent variable “voluntary external assurance” is a binary variable, a logistic regression model has been estimated to observe the effect of CEP on the dependent variable. In addition, a number of control variables have also been included in the empirical model.FindingsThe results of this study exhibit that Finnish firms with superior environmental performance in terms of greenhouse gas emissions and water consumption have their sustainability reports externally assured. Additionally, among the control variables, firm size, leverage and asset age are found to have significant impact on the adoption of voluntary sustainability assurance (VSA). These results are robust, as they do not change substantially when conducting sub-sample analyses.Originality/valueThe literature on VSA is evolving slowly paying very little attention to the association between CEP and VSA. This empirical research aims to extend such scant literature. The results could have important implications to users of environmental information, managers and regulators.

Professionalizing the assurance of sustainability reports: the auditors’ perspective

PurposeThe purpose of this paper is to examine the professionalism and professionalization of sustainability assurance providers based on the experiences and perceptions of auditors involved in this activity.Design/methodology/approachThe empirical study was based on 38 semi-directed interviews conducted with assurance providers from accounting and consulting firms.FindingsThe findings highlight the division of this professional activity between accounting and consulting firms, each of which question the professionalism of the other. The main standards in this area tend to be used as legitimizing tools to enhance the credibility of the assurance process rather than effective guidelines to improve the quality of the verification process. Finally, the complex and multifaceted skills required to conduct sound sustainability assurance and the virtual absence of recognized and substantial training programs in this area undermine the professionalization of assurance providers.Research limitations/implicationsThis work has important practical implications for standardization bodies, assurance providers and stakeholders concerned by the quality and the reliability of sustainability disclosure.Originality/valueThis study shows how practitioners in this area construct and legitimize their professional activity in terms of identity, standardization and competences. The work contributes to the literatures on the assurance of sustainability reports, self-regulation through standardization and professionalization.

Marketing Program Implementation of Greek Fisheries Firms

This study analyses the marketing program implementation in Greek fisheries firms. In this perspective, quantitative research with personal interviews to fisheries firms’ executives is elaborated. Data were analyzed elaborating cluster and discriminant analysis. Findings reveal that there are two distinct groups of Greek fisheries firms regarding their decisions about the components of marketing mix. The results demonstrate that there are differences among the two groups mainly in terms of price and distribution policies. Particularly, 62.6% of sample firms seem to dispose a differential marketing mix, while 37.4% of sample firms seem to dispose a non-differential marketing mix. Notably, both clusters are not aware of quality and sustainability assurance certifications regarding seafood products. From this perspective, there is a potential for a better organized marketing program implementation aiming to respond efficiently in modern market needs.

Increasing the scope of assurance research: new lines of inquiry and novel theoretical perspectives

PurposeTheorizing in the extant sustainability assurance literature is limited. This paper aims to identify apposite organizational theories from related fields which scholars could apply to sustainability assurance research. Through the introduction of theoretical perspectives new to the field, the authors seek to extend current research.Design/methodology/approachA literature review was undertaken and papers using theory to examine research questions concerned with sustainability assurance and business sustainability issues more broadly were categorized by theory and sub area of focus. The authors then considered how organizational theories used in other areas of business sustainability research might augment the current paucity of theorizing applied in sustainability assurance research, thereby opening up new research possibilities.FindingsThe review identified gaps in current theorizing in sustainability assurance research and theoretical frameworks which have the potential to augment research avenues in sustainability assurance, enhance the way researchers interpret their data and increase the understanding of sustainability assurance decisions.Practical implicationsInnovation in sustainability assurance research may lead to developments in sustainability assurance practice, which enhances the credibility of sustainability reports. It will inform ongoing debate regarding whether sustainability assurance should be mandatory, whether a specific reporting format and level of assurance should be prescribed, how the practice can be developed and whether alternatives to enhancing the credibility of sustainability reports need to be found.Social implicationsEnhanced theorizing may shed light on whether sustainability assurance enhances the credibility of sustainability disclosures and whether it leads, or fails to lead, to real improvements in preparers' sustainability-related practices.Originality/valueBy identifying theories which could be applied to sustainability assurance research, this paper facilitates the development of new avenues of research and new ways of interpreting data from the field.

Variation in sustainability assurance practice: An analysis of accounting versus non-accounting providers

This study explores sustainability assurance (SA) practice as an arena of jurisdictional competition between accounting and non-accounting assurance providers. Prior literature on SA, a non-financial assurance practice, has documented the presence of both accounting and non-accounting firms as two major provider categories, pointing to the possibility of significant variation in practice among them. Unlike most prior studies that rely on the analysis of the content of SA reports, this article draws on an in-depth interview-based investigation of the practice. In particular, by reference to Abbott's theory of professions (1988), we explore efforts by different SA providers to claim their professional practice space. Our findings reveal notable differences in the providers' approaches to SA, both between and within the two key provider groups. We make sense of these differences as a consequence of the inter- and intra-professional competitive dynamics where different categories of providers appeal to and emphasize divergent knowledge bases and distinctive types of expertise as a way to differentiate themselves from competition and legitimize their practice approaches. This study contributes to the extant SA literature by providing a holistic overview of the practice field and an empirically drawn perspective on the nature of practice variation.

Verbal tones in sustainability assurance statements

Purpose This paper aims to examine, through the lens of language expectancy theory (LET), how sustainability assurors use optimism and certainty in possible persuasion attempts. The paper also explores a number of explanatory variables that could offer insights into the use of these verbal tones in sustainability assurance reports. Design/methodology/approach First, the paper relies on DICTION standard normalised optimism and certainty ranges in conjunction with descriptive statistics to analyse how sustainability assurors use optimism and certainty. Second, the paper uses quantile regression with robust standard errors to investigate the association between the measures of verbal tone used in this study and several possible explanatory variables. Findings Consistent with LET, the study documents that sustainability assurors exercise caution in using both certainty and optimism in persuasion attempts. The paper also finds that possible explanatory variables significantly associated with optimism include praise, assurance level, legal system and report location. However, reference to sustainability management control (SMC), status of assurance providers, praise, legal system and financial performance appear to explain the use of certainty. Research limitations/implications The paper does not, at this stage, claim causality between the two measures of verbal tone, on the one hand, and the possible explanatory variables explored, on the other hand. It rather reports their possible associations. Furthermore, the study only measures reference to management control system and not reliance on it. Practical implications The main findings of this study imply that the use of optimism and certainty exhibits likely cautious practice by assurors. Nevertheless, assurors are more likely to use certainty more flexibly and appear more discreet when using optimism. Social implications The findings of this paper also indicate how societal expectations play an important role in ensuring cautious persuasive behaviour by sustainability assurors in using verbal tones within sustainability assurance statements. This suggests that stakeholders may place reliance on attestations expressed in these statements. Originality/value The paper represents the first attempt to test LET in sustainability accounting by analysing verbal tones used by sustainability assurance providers. It contributes to the sustainability assurance literature in that it empirically demonstrates how sustainability assurors, as expert communicators, use optimistic tone and verbal certainty in careful persuasion attempts.

An empirical investigation of determinants of sustainability report assurance in France

PurposeThis study aims at providing a proof of the factors associated with sustainability assurance demand by French companies.Design/methodology/approachThis research used panel data methodology.FindingsThe study results demonstrate that institutional ownership and the presence of corporate social responsibility (CSR) committee within the management board have an effect on the demand for sustainability assurance. The results also reveal that three types of stakeholders (employees, environment and customers) positively affect the demand of voluntary sustainability assurance.Originality/valueThe paper provides a preliminary proof on the effects of the governance of corporation and pressure of some groups of stakeholders on the voluntary demand of sustainability assurance in France.

An Empirical Investigation of U.K. Environmental Targets Disclosure: The Role of Environmental Governance and Performance

While there is an increasing number of companies publicly declare environmental targets, very little is known about this area. This paper, therefore, investigates the historical timeline of companies’ environmental targets disclosures (ETDs) and empirically examines whether firms’ environmental governance mechanisms and environmental performance influence ETDs by UK companies over the 2005 – 2013 period. We find that firms show a large degree of variability and inconsistency in their reporting of environmental targets. The results also indicate that most companies, particularly environmentally-sensitive firms, are likely to disclose more soft qualitative targets as a symbolic act to manage the perceptions of their stakeholders and legitimise their existence. Additionally, this study documents a positive relation between the existence of a sustainability committee, use of the Global Reporting Initiative (GRI), sustainability assurance and the extent of ETDs. The results also show that firms with good environmental performance are likely to set and disclose quantitative and hard environmental targets. These results lend support to the stakeholder and legitimacy theories. We suggest that there is a real need for prescribed regulation, which will not only enhance the usefulness of ETDs but also encourages companies to take serious proactive action towards reducing their negative environmental impacts, possibly creating a ‘win-win’ solution. Our findings have important implications for public policy-makers and various stakeholder groups.

Sustainable Phosphorus Management: Defining 4R Practices

Sustainability assurance programs seek clear definitions of 4R phosphorus practices that support continued improvement in both water quality and crop yields. Increasing phosphorus use efficiency is not enough. Site-specific practices addressing region-specific challenges are required.

Regional differences in industry specialization in the sustainability assurance market

PurposeThis paper uses institutional theory to analyze the structure of the sustainability assurance market (SAM) at a global level. The purpose of this paper is to determine if regional differences affect industry specialization in this market.Design/methodology/approachUsing a sample of 3,657 sustainability reports (SRs) with assurance statements, the authors study the global and regional specialization of assurers by breaking down the sample into three main regions. The authors approach industry specialization using previous methodologies applied to the financial audit market, and explain differences statistically significant among regions.FindingsThe authors find different industry specialists depending on the geographical region in which the audit firm is located. The Europe, Middle Eastern and Africa region has the highest number of industry specialists and the Asia-Pacific region the lowest. Notwithstanding the global participation of Big 4 firms, assurance specialization depends on the country where the company is located.Research limitations/implicationsThe paper reveals the need to include regional differences in the analysis of the SAM at the international level.Practical implicationsThe study shows an in-depth study of the SAM that may be useful for assurers, to decide strategic actions in industries and countries and for regulators, to control the risk of monopolistic/oligopolistic markets.Originality/valueThe study presents a novel approach to the analysis of the assurance market for SRs, by studying it from the supply point of view. The analysis provides a measure of specialization that may help understand the structure of the SAM.

Exploring diversity in sustainability assurance practice

Purpose The purpose of this paper is to understand sustainability assurance (SA), and diversity in that practice, by examining assurance providers’ understandings of the practice and the influences that those understandings have on the actual assurance process. It focuses on the issues beyond the content of statements in SA reports. Design/methodology/approach This paper employs semi-structured interviews, supplemented by textual data sources. Research participants are assurance providers in the UK, including those within and outside the accounting profession. Drawing on the perspective of actor-network theory, the study focuses on the associations between different actors and how those shape the assurance practice. Findings The findings indicate that providers’ understandings of SA practice vary significantly. This variation has a major effect on how the assurance practice is conducted. The study identifies four types of SA engagements, which are designated as: social assurance, integrated assurance, formative assurance and compliance assurance. Such a categorization provides a broad-based understanding of the operationalization of SA and the degree of heterogeneity within it. Originality/value This paper extends the understanding of SA by focusing on the practice beyond the statements made by assurance providers, which have been the predominant focus of analysis in the existing literature, and by offering a categorization of the diversity in practice. The focus on the associations between assurance providers and other actors provides a new perspective for exploring the fundamentals of the practice.

The effect of sustainability assurance demand on information asymmetry: evidence from French companies

The purpose of this paper is to examine whether voluntary demand for sustainability reporting assurance by French companies is associated with lower information asymmetry. The use of the generalised least squares method (GLS) for a sample of 768 firm-year observations of French companies belonging to the SBF 250 and CAC All-Tradable indices during the period 2010-2012, highlights how voluntary sustainability assurance demand reduces the problems of asymmetric information between the different market agents. To our knowledge, this study is the first that has examined the impact of sustainability assurance on the information asymmetry in code-law countries, with low investor protection rights, such as France. Moreover, this research examines the effect of sustainability reporting assurance on information asymmetry measured by bid-ask spread. In addition, this study makes a link between two important areas of sustainability assurance and finance.

Sustainability-Driven Resource Allocation for Energy-Harvesting Powered Device-to-Device Communication

We propose a sustainability-driven resource allocation algorithm for energy harvesting powered device-to-device (D2D) communication underlaying cellular networks. In this setup, D2D transmitters harvest energy from ambient energy sources and reuse the uplink cellular channels to perform transmission to the desired D2D receivers. Considering the time-varying and unpredictable nature of the harvested energy, the proposed algorithm ensures the energy sustainability-related quality-of-service with improved system capacity. To reach this goal, a statistical model based on the effective bandwidth/capacity is adopted to formulate the energy-harvesting/-consuming processes and evaluates the sustainability assurance in terms of the statistical outage exponent. Subsequently, we formulate the resource allocation problem with a view to maximizing the sum rate of the D2D links by jointly optimizing the power allocation and spectrum resource matching, meanwhile guaranteeing the energy sustainability requirements. By employing the Lagrangian dual method, we derive an analytical expression for the transmission power allocation and present two rules to match the cellular users with the D2D links for spectrum resource reuse. Our results reveal that both the power allocation and spectrum resource matching closely depend on the statistical outage exponent. With these theoretical analyses, we put forward a distributed subgradient-based iterative resource allocation algorithm with polynomial complexity. Finally, the simulation results demonstrate that the proposed resource allocation algorithm can acquire a substantial sum-rate improvement.

The shaping of sustainability assurance through the competition between accounting and non-accounting providers

PurposeThe purpose of this paper is to examine the competition between accounting sustainability assurance providers (ASAPs) and non-accounting sustainability assurance providers (NASAPs), and how this competition influences the institutionalization of the evolving field of sustainability assurance.Design/methodology/approachAn interpretivist research methodology, guided by an institutional work perspective, is used to analyze interviews with 15 SAPs and 35 sustainability reporting managers (SRMs) in Australia and New Zealand.FindingsASAPs prefer to use International Standard on Assurance Engagements 3000 (ISAE3000), because it is well recognized in the profession, adheres to ASAPs’ regulatory requirements, and mirrors their financial audit methodologies. This preference influences ASAPs’ institutional work as they compete against NASAPs and how they institutionalize sustainability assurance. ASAPs’ institutional works include presenting sustainability assurance as similar to a financial audit, arguing in support of a single provider for financial audits and sustainability assurance, and undermining NASAPs and their preferred sustainability assurance standard, AA1000 Assurance Standard (AA1000AS), by appealing to senior management. In comparison, NASAPs promote AA1000AS as a specialist standard among SRMs, emphasizing the standard’s sustainability enhancing qualities and its flexibility, while discrediting ASAPs and ISAE3000 as out of touch with sustainability objectives.Research limitations/implicationsA new conceptual model is constructed that can be used in institutional work research.Practical implicationsThe accounting profession is encouraged to consider more flexible, innovative methods in new assurance markets. This involves using new assurance standards as well as developing specialist standards for new forms of assurance. Regulation over sustainability assurance could be helpful, but regulators should be careful not to stifle competition in this evolving field.Originality/valueThis paper examines how competition between ASAPs and NASAPs influences the institutionalization of sustainability assurance. The paper offers a new model for the analysis of institutional work, which could be used by researchers, new insights into the emerging field of sustainability assurance, as well as a figure and discussion that clarifies the broader implications of the findings.

Assurance reports included in the CSR reports of French firms: a longitudinal study

PurposeThis paper aims to examine the practice of sustainability assurance and in particular the content of the assurance reports disseminated in the corporate social responsibility (CSR) reports. The objective of the research is to study the evolution of the content of the assurance reports of French companies. Have the reports evolved as a result of the standardization and regulation of the audit?Design/methodology/approachA longitudinal study has been carried out on French companies publishing CSR reports and their sustainability information has been checked for several years. The sample is composed of 19 listed French companies and 135 assurance reports over a period from 2001 to 2015.FindingsThe results highlight a change in the content of assurance reports according to standardization and regulatory of sustainability auditing. The content evolves from a generic discourse to a normative discourse notably because of the realization of a majority of assurance missions by accounting professionals and the increasing use of ISAE 3000 as well as by the introduction of the Grenelle II Law.Practical implicationsThis paper shows how assurance reports have evolved over time in a particular regulatory context of the introduction of a law specific to assurance, Grenelle II Law, using a sample of French companies.Originality/valueAlthough some studies have attempted to provide a historical analysis of this practice, no research has focused on longitudinal analysis in a particular context of introduction of a law specific to the assurance mission. The lack in previous literature resides in the lack of longitudinal analysis of assurance reports in the light of the evolution of the normative and regulatory frameworks.

Correction to: Institutionalization of the Contents of Sustainability Assurance Services: A Comparison Between Italy and United States

The original article was published without open access and with the copyright notice indicating © Springer Nature B.V. The article is now open access with the copyright residing with the authors.

Institutionalization of the Contents of Sustainability Assurance Services: A Comparison Between Italy and United States

A descriptive-exploratory analysis of assurance practices is presented in this paper, by analysing the patterns of sustainability assurance reporting in two national contexts with different levels of assurance activity (Italy and the U.S.) over a period of 11 years (2003/2013). The study is based on theoretical insights drawn from institutional sociology and normativity production. It is framed both in the Italian situation, where assurance statements consistently include a narrow set of formal and procedural communications, and in an unsettled situation in the U.S., where assurance activity is more incipient, but where experimentation in substantial assurance disclosure practices has more room to develop. Its main implication is that the diffusion of sustainability assurance and the creation of sustainability assurance disclosure norms are not without its cost: information quality does not increase with patterned practice. The results also point towards the noteworthy role of specific professionals in the earlier and later stages of assurance practice norms. They reveal a significant influence of non-Big4 firms (mainly certification bodies and consulting and engineering firms) in the diffusion of sustainability assurance disclosure norms. In contrast, the Big4 firms appear to be positively associated with the narrowing down of the assurance focus to a selected subset of this activity in later stages of the development of the assurance norm. In this regard, this study provides insight into the circumstantial—but relevant—carrier role of the Big4 firms in determining what “assurance” means.

Sustainability Assurance in Socially-Sensitive Sectors: A Worldwide Analysis of the Financial Services Industry

Sustainability reporting and assurance have considerably increased in the last decades. Among different sectors, ‘sensitive sectors’ attracted the attention of many academics. However, most of research works were focused only on ‘environmentally-sensitive sectors’. Therefore, after the loss of trust caused by the lack of transparency due to the crisis, ‘socially-sensitive sectors’ as financial services sector needs to strengthen users’ confidence in the credibility of their reported activities. The aim of this paper is to assess assurance practices worldwide in one of the main ‘socially-sensitive sectors’: the financial services sector. We study what factors are associated with adoption of assurance and choice of assurance provider, and whether assurance statements differ across providers. Our results reveal that, compared to the global context, companies operating in the financial services sector are more likely to adopt assurance and to choose accountants as assurance providers. Our findings show that adoption of assurance depends on company size. We also found that companies using the financial services sector supplement are more prone to adopt assurance. Our results also evidence that choice of assurance provider depends on the country and listing status Finally, our research shows a great variability in assurance statements across providers.