Sustainability Data: Assertions and Audits

What Are Assertions and Audits?

Audit and verification are the processes of examining and verifying the accuracy, completeness, and reliability of data and information and assurance is the deliverable or outcome of the audit. There are different levels of assurance, and companies often begin with a lighter touch and work their way up to more in-depth verification.

Assertions are the claims or statements made by organizations about their sustainability performance and provide third-party validation of sustainability data, offering stakeholders confidence in its accuracy, completeness, and adherence to recognized standards. Examples include energy efficiency achievements, greenhouse gas (GHG) reductions, or adherence to sustainability standards. These claims form the foundation of credibility in sustainability disclosures, directly influencing stakeholder confidence and regulatory evaluations. Depending on the depth of the review, assurance can be categorized as:

• Limited Assurance: Focused primarily on inquiries and analytical reviews, providing moderate confidence, and typically based on a limited data set. The accepted level of risk of material misstatement is higher compared to reasonable assurance engagements.
• Reasonable Assurance: A deeper investigation akin to financial audits, involving site visits and extensive data testing to minimize the risk of material misstatements. The assurance provider reduces the risk that the sustainability information is materially misstated to a predefined acceptably low level, though never to zero.
• Attestation: is a review of a sub-component of a disclosure, where a third party will attest to the processes and controls to which the company handles a set of data. 

Why Assurance Reports Matter
Assurance reports bridge the gap between sustainability assertions and stakeholder trust. They enable businesses to:

• Enhance the credibility of ESG disclosures.
• Reduce the risk of regulatory penalties.
• Attract ESG-focused investors.

Regulatory Momentum for Sustainability Audits

• California SB-253: Requires limited assurance for Scope 1 and 2 emissions by 2026, escalating to reasonable assurance by 2030.
• EU CSRD: Starts with limited assurance, progressing to reasonable assurance, with specific standards to be implemented by 2028.

California’s Climate Corporate Data Accountability Act (SB-253): SB-253 requires public and private companies doing business in California with over $1 billion in total annual revenues to disclose Scope 1, 2, and 3 emissions and obtain assurance over those emissions. For Scopes 1 and 2, limited assurance will be required beginning in 2026, then reasonable assurance beginning in 2030. For Scope 3, limited assurance will be required beginning in 2030. The California Air Resources Board must provide more specific requirements around disclosure and assurance by January 1, 2025. 

EU Corporate Sustainability Reporting Directive (CSRD): The EU CSRD takes a progressive approach to enhancing the level of assurance required for sustainability information, beginning with limited assurance and expanding to reasonable assurance. The European Commission will adopt assurance standards for limited assurance no later than October 1, 2026 by means of delegated acts. For reasonable assurance, there will be standards in delegated acts by October 1, 2028, following an assessment to determine if reasonable assurance is feasible for auditors and undertakings. Considering the results of that assessment and, if appropriate, those delegated acts will also specify the date from which a requirement for reasonable assurance shall apply. 

Voluntary ESG and sustainability reporting frameworks also address assurance. For example, the Task Force on Climate-related Financial Disclosures (TCFD) states that “disclosures should be subject to internal governance processes that are the same or substantially similar to those used for financial reporting.” Some entities that score or rank companies’ sustainability disclosures reward or allocate points for assurance practices, such as: 

The Carbon Disclosure Project (CDP): supports verification and assurance as good practice in environmental reporting because it offers data users further confidence in the accuracy of the data reported. It asks respondents to indicate the type of verification or assurance (from limited to high assurance), assurance cycle, and completion status for the current reporting year. 

Challenges in Assertions

While assertions are vital, their accuracy and reliability are often hindered by data silos, incomplete datasets, and inconsistencies in reporting methodologies. According to a 2024 Nasdaq ESG Solutions research, 97% of companies report that audit and assurance of ESG and sustainability data is a challenge. Compounding these challenges is the prevalence of greenwashing. With insufficient or inaccurate data, organizations risk accusations of greenwashing, eroding stakeholder trust. A recent Google Cloud survey indicates that 72% of executives believe their industry peers would face such accusations if scrutinized thoroughly.  Without robust data management and validation practices, organizations risk accusations of greenwashing, eroding trust among investors, customers, and regulators.

The Urgency of Investor-Grade ESG Data 

In the face of these issues, there is a pressing need for a shift towards investor-grade ESG data – data that is not only reliable and accurate but also actionable and integral to decision-making processes. High-quality, real-time environmental data is paramount in this shift. Tracking facility-level energy consumption and greenhouse gas emissions over time provides granular insights, enabling firms to set realistic, science-based targets and reducing the risk of greenwashing.

Data Opportunities

• Employ a centralized repository for information: Input and store data in one shared location, rather than various static documents and folders. Collecting data in one digitized location enables audit trails with detailed date and time stamps and user logs.
• Formalize the process for data collection: Automate data collection through APIs and bulk uploads. The fewer times that individuals touch the data, the less likely it is to be compromised. Lock data at the end of data collection periods to prevent unintended changes.
• Address data anomalies and outliers: If there are abnormalities in the data, document reasoning for the auditor. Save time during an audit by attaching notes about the data changes, such as variances due to mergers and acquisitions.

The Role of Tools like WatchWire

With regulations like the EU CSRD and California’s SB-253 setting higher benchmarks, now is the time to invest in robust data management systems. Sustainability reporting requires centralized, accurate, and audit-ready data management. Platforms like WatchWire simplify ESG data collection, validation, and reporting by offering:

• Real-Time Monitoring: Track energy consumption and GHG emissions at the facility level.

• Standardized Reporting: Align disclosures with frameworks like CDP, TCFD, and EU CSRD.

• Collaborative Workflows: Break down data silos by creating a single source of truth accessible across teams.

More About WatchWire

WatchWire by Tango is a market-leading, energy and sustainability data management platform that uses cloud-based software to collect, automize, and analyze utility, energy, and sustainability data metrics. WatchWire streamlines, automates, and standardizes your sustainability reporting process by integrating directly and/or providing reporting exports to ENERGY STAR Portfolio Manager, LEED Arc, GRESB, CDP, SASB, GRI, and more. The platform provides customizable dashboards, which allow asset managers, sustainability managers, engineers, and more to monitor individual key performance indicators (KPIs) and create custom views for specific use cases.

To learn more about WatchWire and its capabilities, you can visit our website, blog, or resource library, request a demo, or follow us on LinkedIn, Instagram, or Twitter to keep up-to-date on the latest energy and sustainability insights, news, and resources.