Key findings from the Financial Reporting Council’s sustainability reporting market study

Crowe UK has expressed strong support for the Financial Reporting Council’s (FRC) recent ‘Assurance of Sustainability Reporting Market Study’. The study highlights several critical points about the current state and future direction of sustainability assurance in the UK.

Our key observations:

• Fragmented market: The UK currently has a purely voluntary sustainability assurance market which is highly fragmented, in 2023 59 different providers supported FTSE 350 firms with independent review of their disclosures. 
• Diverse assurance providers: Only 27% of FTSE 350 firms use their external auditors and over 30% of firms rely on non-audit firms for their assurance, using the ISO14064 rather than non-financial audit standards. 
• Inconsistent delivery: There is a lack of consistent delivery, raising concerns over the value and credibility of assurance provided. 
• The European Union (EU) mandates: EU has mandated assurance for Corporate Sustainability Reporting Directive (CSRD) disclosures, starting in 2025 and there is therefore a need for UK to put in place a regulatory framework. 
• Proposed frameworks: The FRC proposes a ‘Policy Framework’ to ensure consistent standards for assurance quality and provider qualifications, and a ‘Regulatory Framework’ for consistent oversight and accreditation of assurance provision. 
• Future implications: The implication is that the UK will introduce mandatory assurance over sustainability disclosures by the largest listed firms, initially on a limited assurance basis and with a gradual roll out to include AIM listed and large private companies and partnerships.

Crowe UK’s practical experience of delivering sustainability assurance projects for clients reinforces the need for a level playing field in terms of policy, regulation and quality standards. We encourage the regulators to move forward to keep pace with developments in the EU. Crowe UK remains ideally placed to advise and/or assure organisations of all sizes on their sustainability journey: from setting their objectives and strategies to preparing and positioning themselves with the data and information they need to ensure the assurance process can be met.

For more information, contact Alex Hindson or your usual Crowe contact.