ESG Assurance in the United States

We provide the first, large-sample evidence on third-party verification of firms’ environmental and social metrics in ESG reports (“ESG assurance”) in the United States. Focusing on S&P 500 firms from 2010-2020, we document a striking increase in not only the number of firms with ESG assurance—in 2020 (2010), 76% (38%) of the S&P 500 had an ESG report and 46% (16%) involved assurance—but also the number of metrics assured within reports. Unlike financial audits, ESG assurance varies widely in form and substance, including the choice of metrics assured, the level of assurance, and assuror identity. We show that firms’ decision to obtain ESG assurance is primarily driven by their adoption of ESG reporting frameworks, such as GRI, and peer effects. The firm characteristics documented in prior literature—which primarily uses international settings and early periods—play a minor role. Assurance is associated with improvements in ESG disclosure, ESG ratings, and the number of institutional investors holding the firm’s stock. Overall, ESG assurance is an increasingly relevant part of U.S. firms’ reporting strategy and provides a rich area for future academic research.

Keywords: G11, G18, G30, M14, M41, M42 ESG reporting, ESG assurance, auditing, sustainability

JEL Classification: G11, G18, G30, M14, M41, M42

Suggested Citation: Suggested Citation

Gipper, Brandon and Ross, Samantha and Shi, Shawn, ESG Assurance in the United States (July 09, 2024). Stanford University Graduate School of Business Research Paper No. 4263085, UC San Francisco Research Paper No. Forthcoming, Review of Accounting Studies, Forthcoming [10.1007/s11142-024-09856-2], Available at SSRN: https://ssrn.com/abstract=4263085 or http://dx.doi.org/10.1007/s11142-024-09856-2