Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    The Association between Sustainability Governance...
    research summary posted July 24, 2015 by Jennifer M Mueller-Phillips, tagged 15.0 International Matters, 15.05 Sustainability Services 
    The Association between Sustainability Governance Characteristics and the Assurance of Corporate Sustainability Reports.
    Practical Implications:

    In order to develop future regulation, policy-makers rely on firm-specific sustainability information to analyze current corporate activity trends. The findings may help to inform regulators of the trends in SRA among U.S. firms and on the impact governance has on SRA adoption. This may assist policy-makers in influencing increased SRA without costly regulation. The findings may also inform stakeholders demanding reliable sustainability information, such as investors, rating agencies, NGOs, and customers, among others. Understanding the impact of the corporate governance mosaic on SRA may inform stakeholders on how to effectively influence SRA adoption or foster reliable sustainability reporting practices.


    Peters, G. F., & Romi, A. M. 2015. The Association between Sustainability Governance Characteristics and the Assurance of Corporate Sustainability Reports. Auditing: A Journal Of Practice & Theory 34 (1): 163-198.

    assurance providers, Chief Sustainability Officers, corporate governance, environmental committees, sustainability assurance, sustainability assurance determinants
    Purpose of the Study:

    In a time when sustainability reporting is increasingly criticized for its lack of transparency, sustainability assurance potentially provides both external stakeholders and management with increased confidence in the firm’s sustainability information for decision-making. However, a lack of common sustainability reporting standards and the public’s inexperience with the origin and meaning of sustainability reports allow managers a platform for opportunistic behavior. While 93 percent of the world’s largest corporations now publish a sustainability report, only 59 percent of those reports employ any form of assurance. In this paper, the authors provide a more comprehensive examination of the factors influencing SRA by considering the existence of and characteristics associated with an extensive corporate governance mosaic.

    Within the sustainability report assurance (SRA) arena, there are three common types of assurance providers: internal auditors, consultants and professional accounting firms. This study seeks to provide evidence on whether a firm’s sustainability-oriented corporate governance mechanisms influence the adoption of SRA and the selection of assurance provider. Specifically, the authors examine the presence and characteristics of environmental committees on the Board of Directors and a Chief Sustainability Officer (CSO) among the management team. Further, they seek to provide evidence concerning the value-relevance of the various assurance options, as well as the expanding sustainability governance mosaic.

    Design/Method/ Approach:

    The sample consists of 912 U.S. sustainability reports issued from 2002 through 2010. The authors examine the effects of sustainability corporate governance mechanisms on the likelihood that a firm chooses SRA using a logistic regression model.


    In general, the authors fail to find an association between the presence of an environmental committee and SRA. However, a more in depth examination suggests that environmental committees containing members with related environmental expertise display a positive association with SRA. While it is unclear whether this result indicates that environmental committees without experts are merely a symbol of a commitment to sustainability, or more of an inability to influence due to their limited knowledge or experience with the use of assurance services, the results are informative in helping to understand the conditions in which firms pursue greater reliability of sustainability reporting. Such committees appear to prefer the services of professional accounting firms. The authors also find that CSOs with prior sustainability or environmental expertise are positively associated with SRA. However, the CSOs do not seem to distinguish between the services of professional accounting firms compared to consultants and internal auditors, although they do prefer consultants to internal auditors. The authors also find that these associations are mitigated by other environmental contextual characteristics of the firm, including the firm’s prior environmental performance.

    International Matters
    Sustainability ServicesTraining & General Experience