The Effects of Recent Development in Sustainability Reporting on Assurance – A cross-sectional field study of the Finnish context

Abstract

The primary objective of this study is to examine how recent development in sustainability reporting has affected the assurance of non-financial information in an unregulated context. The topic is approached holistically since there exists a lack of previous research around the subject. Furthermore, the focus is to shed light on the latent reasons behind the observations instead of only disclosing them. This study fills the research gap by expanding knowledge on the indirect effects that new sustainability reporting frameworks and legislations have on assurance.

This thesis is conducted as a qualitative, cross-sectional field study in Finland. Interviews are the primary data collection method. In total, eight persons were interviewed, of whom seven are assurors. In addition, one professor was interviewed. Furthermore, sustainability reports and assurance statements from recent years were utilized as secondary data. The data were collected during spring 2020. Observations of the thesis are inspected and analyzed through the theoretical lenses of stakeholder theory.

In the thesis, three recent additions to sustainability reporting are highlighted. These are the EU’s directive on the reporting of Non-financial Information (NFI), Integrated Reporting (IR) and recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The findings indicate that sustainability reporting is shifting towards a data-oriented approach. Partly due to the impact of TCFD, sustainability reporting is more connected to financial matters than before. Consequently, sustainability assurance is approaching auditing as a practice. However, the effects of IR and NFI directive were seen as rather disappointing. It was found out that the level of assurance has not increased significantly yet. Due to the increased importance of financial aspects in sustainability, from the stakeholder perspective, it can be stated that financiers are the most central stakeholder group and the changes in the field of sustainability reporting are mainly based on their needs. The results suggest that in the future, the cost of financing will be tied to the level of sustainability reporting. Consequently, assurance will have a pivotal role. Hence, through financiers’ pressure, all the stakeholders benefit in the form of improved and more reliable sustainability assurance. Environmental aspects are at the forefront of this development.