Assurance is not mandatory under the current FCA proposal. However, the FCA proposes that a statement be included in annual reporting as to whether assurance has been obtained over any UK SRS disclosures. Where obtained, it is expected that companies will include sufficient information for a reader to understand the nature and scope of assurance.
We expect this to result in a greater market-led demand for assurance by boards, investors and other stakeholders who require credible disclosures. Where financially material sustainability information is being disclosed by companies (as required by UK SRS), a statement that assurance has not been obtained could be at odds with the relative importance to stakeholders. This contradiction would be exacerbated where peers obtain assurance over the same information.
Where a UK company has a global footprint, third-party assurance may also be driven by assurance being mandatory in another jurisdiction (e.g. the European Union and countries such as Australia, and Pakistan). Having a centralised approach to Sustainability reporting and assurance could drive efficiency in meeting global requirements.
As outlined in the FCA consultation, sustainability assurance had increased to 57% of the FTSE 350 by 20232. KPMG research found that 85% of the FTSE 100 obtained third-party assurance over sustainability information in 20253.