An Introduction to ESG Assurance and Reporting: Five Essentials Every Business Needs to Know

In 2004, the World Bank and the United Nations Global Compact issued a seminal report entitled "Who Cares Wins," which is widely recognized as the inception of the "ESG" framework. This approach emphasizes environmental, social, and governance considerations within financial markets. Since its introduction, ESG has become an essential element of corporate strategy, influencing all economic sectors and industries globally.

Tracking and assuring ESG is now crucial for managing an organization’s long-term sustainability, risk management, and value creation for stakeholders. Companies prioritizing ESG are better equipped to handle environmental and social challenges, protect their reputation in a competitive market, and minimize both legal and financial risks. Assuring progress on ESG initiatives often involves intricate processes and methodologies that can be difficult to understand and execute properly without the insight of an experienced third-party certification body.  

In this blog, the ESG Assurance Program team at SCS Global Services discusses five essential considerations surrounding ESG assurance and its growing significance in sustainability reporting. We'll cover topics such as types of assurance, the verification process, and the differences between mandatory and voluntary ESG frameworks — plus how to get started if your company is new to ESG assurance. 

1. Types of Assurance

   There are two main types of assurance: limited and reasonable. Each of these levels of assurance refers to the degree of rigor and the resulting conclusion derived from the data and information analyzed.

   Limited assurance offers moderate confidence and is generally quicker and more cost-effective, while reasonable assurance provides a higher level of confidence through extensive verification. As we will see in subsequent sections of this blog, the upcoming mandatory regulations invoking ESG assurance generally require limited assurance, which may transition to reasonable assurance over a defined period of time, depending on the regulation.

   In a limited assurance engagement, the assurance provider would still be able to confirm a moderate level of confidence. In a real-world setting, the assurance provider might draft a statement that confirms nothing has come to their attention to suggest that the ESG information is materially misstated. Such a statement is known as a negative assurance statement and results from procedures involved with a limited assurance approach, typically including basic inquiries, analytical reviews, and minimal testing and sampling. So, unlike reasonable assurance, limited assurance does not involve extensive verification or detailed evidence gathering.  

   Conversely, reasonable assurance involves much more rigorous evidence gathering and verification, which make this approach more resource intensive and time consuming. Reasonable assurance provides greater credibility and trust, especially in contexts where ESG performance is closely scrutinized — for instance, in formal reports to investors, regulators, or the public, or when engaging a framework that gives an ESG score (such as the S&P Global ESG Score — more on this later). Before such a score can be granted, a company must first undergo the formal ESG audit process — a step we discuss and contextualize in the next section.

2. The process of ESG evaluation and reporting 

   The process of ESG evaluation and reporting involves several critical phases to ensure accurate and reliable disclosures. Though each company engaging the process will likely experience minor changes in specific instances, the overall process contains six stages. The process begins with the pre-engagement phase, where goals are defined, the scope is determined, and potential conflicts of interest between the company and the verification body are assessed. Once agreements are finalized, the planning phase includes a kickoff meeting, initial data requests, and a high-level review of ESG metrics. This phase also involves a preliminary risk assessment to identify potential errors or misstatements.

   The subsequent testing phase requires evidence gathering, recalculations on sampled data, and accuracy assessments of disclosures. Findings are communicated during this phase, allowing for corrective actions to be implemented before final approval. Once all findings are addressed, the verification body drafts a verification report and assurance statement, detailing procedures and conclusions.

   The final phase is an independent review conducted by a third party uninvolved in earlier phases. This ensures the accuracy, objectivity, and reliability of the verification process. Organizations are advised to engage auditors early and maintain clear communication to streamline timelines and address potential delays.

3. Metrics across ESG pillars 

   Metrics associated with ESG encompass diverse and critical considerations broadly categorized by the now well-known initialism indicating each pillar: environmental, social, and governance. Environmental metrics include greenhouse gas emissions (GHG) as the major component of overall assurance, but subsequent iterations might expand to include water usage and waste management, reflecting resource efficiency and sustainability practices. Most organizations begin with GHG reporting and gradually broaden their scope as they advance in their environmental reporting practices. Social metrics often focus on diversity, equity, and inclusion (DE&I) initiatives, as well as health and safety performance, ensuring fair treatment and well-being across stakeholders.  

   Governance metrics emphasize the structure and operation of corporate oversight, including board diversity and anti-bribery measures, which highlight organizational integrity and ethical standards. Tailoring the selection and reporting of these metrics to a company’s materiality ensures they address the most relevant aspects of sustainability and provide comprehensive disclosures aligned with regulatory and stakeholder expectations. 

   With ESG, the time needed for determining metrics can vary depending on what is being assured. This is why identifying metrics — an activity that usually happens before the formal audit — can influence the larger ESG assurance process. In many cases, information a company must quantify and report comes from different departments or entities outside of the operating boundary. If an issue arises and requires a follow-up, it may take considerable time to resolve. For instance, ensuring human rights in the supply chain requires extensive visibility and thorough information gathering, which can be time-consuming. 

   When data are sourced from various origins and multiple databases, delays may occur between departments or during the regular release of information. For instance, HR data might be tracked on a rolling basis throughout the year and need to be assessed in parts, or the time available between data collection to report publication might be a narrow window — and in such a scenario, errors can lead to greater delays. It is essential to engage with auditors early in the process and maintain clear communication regarding timelines. 

4. Understand the regulatory landscape for both voluntary and mandatory ESG reporting 

   ESG assurance requirements — specifically GHG emissions disclosures — continue to be incorporated into many evolving pieces of government legislation, such as California’s recent Senate Bills 253 and 261 (which are being amended by Senate Bill 219). Regardless of the jurisdiction, the regulatory landscape for ESG reporting can be categorized most simply by voluntary and mandatory frameworks. In this section, we will dig into the roles and expectations for international mandatory frameworks as well as some of the benefits of engaging voluntary frameworks in support of an overall more transparent and nimbler ESG assurance process.  

   Mandatory Regulatory Frameworks 

   Corporate Sustainability Reporting Directive (CSRD) 

   The Corporate Sustainability Reporting Directive (CSRD) is one of the major pieces of sustainability-focused legislation to come from the European Union. Officially launched in January 2023, CSRD aims to enhance and expand the existing Non-Financial Reporting Directive (NFRD) — essentially mandating that a company’s sustainability metrics be treated with just as much importance as traditional financial information reporting. According to EU rules, CSRD requires large companies and listed companies to report on their sustainability performance, including ESG factors as well as how their operations impact people and the environment. Limited assurance is still required, but over time this could become a requirement for reasonable assurance. At present, the reasonable assurance requirement is being debated as part of the Omnibus 1 package.  

   International Sustainability Standards Board (ISSB) 

   The International Sustainability Standards Board (ISSB), one of the standards-setters of the International Financial Reporting Standards (IFRS) Foundation, provides a global baseline for sustainability-related financial disclosures. Its framework includes two key standards: IFRS S1 — addressing general sustainability-related disclosures — and IFRS S2, focusing specifically on climate-related disclosures. These standards are designed to complement financial statements by identifying how sustainability risks and opportunities impact a company's value.  

   As of 2025, over 30 jurisdictions have adopted or are preparing to adopt ISSB standards into their regulatory frameworks. The ISSB collaborates with the European Union to ensure interoperability with the European Sustainability Reporting Standards (ESRS), reducing reporting complexities for global organizations. While ISSB does not mandate ESG assurance itself, many jurisdictions implementing these standards require limited assurance, with some transitioning to reasonable assurance over time. By providing a consistent framework, the ISSB enables organizations to align sustainability disclosures with regulatory requirements, ensuring comprehensive and credible ESG reporting across multiple sectors and regions. 

   The advantages of voluntary frameworks 

   While the voluntary reporting frameworks discussed in the following sections do not mandate third-party assurance of ESG reporting, they strongly recommend it to enhance credibility and alignment with standards. Assurance under these frameworks signals commitment to transparency and boosts stakeholder value, making them beneficial for companies aiming to position themselves as sustainability leaders. 

   Global Reporting Initiative (GRI) 

   The Global Reporting Initiative (GRI) is a widely recognized voluntary framework for sustainability reporting that emphasizes transparency and accountability in ESG practices. Although third-party assurance is not mandatory under GRI, organizations are strongly encouraged to seek external verification to enhance the credibility and reliability of their ESG disclosures. Adhering to GRI standards involves disclosing the scope of assurance, the assurance provider's details, the level of assurance obtained, and the specific standards used, such as the International Standard on Assurance Engagements 3000 (ISAE) or AccountAbility 1000 (AA1000). 

   By aligning with GRI, companies signal their commitment to comprehensive and verifiable sustainability reporting, which bolsters stakeholder trust and positions them as leaders in sustainability efforts. GRI's flexible yet rigorous approach allows organizations across diverse sectors to tailor their reporting to material ESG issues, fostering greater alignment with global sustainability goals. Its role in the broader ESG ecosystem makes it a critical tool for organizations aiming to meet increasing stakeholder and regulatory expectations. 

   United Nations Global Compact (UNGC) 

   The United Nations Global Compact (UNGC) is a voluntary framework for businesses to align their operations and strategies with universally accepted principles in the areas of human rights, labor, environment, and anti-corruption. While external assurance is not explicitly mandated under the UNGC, companies are encouraged to pursue third-party verification to enhance the credibility of their disclosures and demonstrate accountability.

   Alignment with the UNGC can elevate a company's commitment to sustainability, foster stakeholder trust, and support alignment with broader global sustainability goals. This framework provides an opportunity for organizations to embody transparency and responsibility without enforcing rigid reporting requirements. Companies seeking alignment are advised to adopt robust practices, such as verifying ESG-related data to ensure reliability and consistency, particularly when interfacing with other reporting standards such as ISAE 3000. By emphasizing principles over mandates, the UNGC encourages businesses to integrate ethical and sustainable practices into their operations and reporting methodologies. 

   United Nations Sustainable Development Goals (UNSDG) 

   The United Nations Sustainable Development Goals (UNSDG) serve as a global framework designed to guide businesses, governments, and organizations in advancing sustainability across economic, social, and environmental dimensions.  

   While UNSDG itself does not mandate specific ESG reporting requirements, it strongly encourages alignment with ESG principles to achieve its overarching objectives. Incorporating ESG factors into UNSDG initiatives allows organizations to demonstrate accountability, transparency, and commitment to key global priorities such as supporting climate action, reducing inequalities, and fostering sustainable growth. This voluntary framework provides flexibility for entities to tailor their strategies to their unique operational contexts, fostering meaningful contributions to the UNSDG objectives.  

   By integrating ESG metrics into their operations, organizations can enhance their credibility and stakeholder trust, ensuring alignment with broader sustainability goals. The UNSDG framework's emphasis on ethical and sustainable practices makes it a significant tool for entities aiming to drive impactful changes and contribute to the global agenda of sustainable development. 

   Task Force on Climate Related Disclosure (TCFD) 

   The Task Force on Climate-Related Financial Disclosures (TCFD) emphasizes principles for effective disclosure in ESG reporting, with a particular focus on verifiability to ensure reliability and trustworthiness. TCFD does not explicitly mandate external assurance, but it encourages verifiable information, either internally or externally, to strengthen the integrity of disclosures. This framework is becoming increasingly significant as companies align their reporting with evolving global standards. 

   Though TCFD is no longer functioning as its own entity, its primary work has been subsumed by the IFRS Foundation. This change has not affected the principles originally posed by TCFD but merely moved the monitoring of companies’ climate-related disclosures to a different organization. 

   In the United Kingdom, companies meeting thresholds of over £500 million in revenue and more than 500 employees are legally mandated to adhere to TCFD-aligned climate-related disclosures under Sections 414CA and 414CB of the Companies Act of 2006. These provisions ensure compliance with TCFD principles, underlining its importance in corporate sustainability frameworks. Incorporating verifiability and providing robust climate-related information means that TCFD aligns with broader ESG objectives, serving as a critical tool for companies seeking to demonstrate transparency, accountability, and commitment to sustainability. 

   S&P Global 

   S&P Global is a voluntary framework designed to align ESG disclosures with multiple reporting standards, accommodating organizations that aim to enhance credibility and stakeholder trust. Though S&P Global does not mandate third-party assurance, integrating assurance reports can bolster alignment with other frameworks and improve an organization’s ESG score. Such external validation ensures higher confidence in reported data, minimizing errors, and increasing overall reliability. 

   S&P Global emphasizes rigorous standards to evaluate ESG performance, encouraging organizations to adopt robust reporting practices. Assurance under this framework signals a commitment to transparency and accountability and helps distinguish companies in competitive markets. By aligning ESG metrics with S&P Global standards, organizations can demonstrate their serious approach to sustainability reporting, thus enhancing their reputation and stakeholder relationships. The framework’s adaptability also supports diverse business needs, enabling companies to effectively address specific ESG criteria, such as environmental impact, social initiatives, or governance practices. 

   It's important to note that assurance not only validates the accuracy of reported information, but also strengthens alignment with global standards, enhances transparency, and demonstrates a serious commitment to accountability. Simply put, assurance transforms your ESG reporting from sufficient to truly reliable. 

5. The benefits of ESG assurance

   After going through the process of ESG assurance, aligning with regulatory frameworks and requirements across countries and jurisdictions, companies deserve to understand what this work means for them in terms of benefits and improved business outcomes. An audit provides insights into areas where internal controls or processes can be strengthened. By identifying these opportunities for improvement, organizations can enhance their operations, boost efficiency, maintain year over year (YoY) improvement in ESG reporting, and reduce the risk of fraud or error.

   Above all, ESG assurance lends reliability to organizations that engage in this reporting. Third-party certification of ESG assurance in particular offers significant benefits because it provides data validation, among other features, which helps minimize errors, misstatements, and even greenwashing. Such assurance adds credibility that internal reviews cannot fully provide, particularly in the face of diverse global regulatory requirements. Companies gain tailored approaches to meet jurisdiction-specific rules, ensuring compliance and accuracy across varying frameworks. 

   Additionally, assured ESG disclosures foster trust among stakeholders, including investors, customers, and regulators, signaling a company’s commitment to transparency and accountability. This validation strengthens brand credibility as organizations demonstrate proven sustainability efforts rather than mere promotional claims. In competitive markets, ESG assurance distinguishes forward-thinking companies and aligns them with global sustainability goals. Through prioritizing ESG assurance, businesses position themselves as responsible leaders, fostering long-term loyalty and reputation enhancement among value-driven consumers and stakeholders. 

Planning Ahead

Because ESG assurance requirements may differ across jurisdictions — as in, requirements will be different within the EU, United Kingdom, Asia, and the United States, for example — a one-size-fits-all path is not as effective as a tailored approach suited for each company’s needs. A tailored approach ensures a company’s data aligns with the specific rules of each jurisdiction to which that company may be subject. Obtaining assurance of reported data can ensure that reports are reliable and free from misstatement. Likewise, third-party certification of ESG assurance can support the often arduous and time-consuming process of aligning ESG reporting with new requirements in certain sustainability regulations such as CSRD, which now includes a double materiality component.  

SCS Global Services brings four decades of expertise in validation, verification, and third-party certification across various economic sectors – including those that are heavily impacted by or subject to all mandatory regulatory ESG assurance frameworks. Through our ESG Assurance Services, we lead companies of all sizes in managing the full reporting and verification process.  

Do you have more questions or need a more in-depth explanation of ESG assurance? Be sure to watch our webinar replay, “Understanding ESG Assurance: A Comprehensive Introduction” (published May 2025).

We also offer additional ESG assurance information on our service page and are always open to receiving your questions and inquiries. Drop us a line and get started on this important work today: [email protected]