Maria Cauchi Delia, CEO at the Malta Institute of Accountants, will moderate a panel discussion on sustainability assurance at Sustainability LIVE Malta. Here, she outlines the concept of sustainability assurance and how this enhances credibility and trust.
What is sustainability assurance and what are its main benefits to businesses?
Sustainability assurance is an independent assessment of a company’s environmental, social, and governance (ESG) disclosures on the basis of standards established at a European and international level. This process of external assurance strengthens the credibility of the information being provided by an organisation and helps stakeholders make informed decisions on sustainability matters.
Globally, and especially among younger generations, there is increasing concern about issues like climate change, social inequality and ethical sourcing. As businesses face heightened scrutiny over their sustainability claims, independent assurance plays a key role in verifying that reported data aligns with these standards.
Sustainability assurance independently validates an organisation’s sustainability data and disclosures, enhancing credibility and trust. By ensuring reliability, and consistency, it strengthens stakeholder confidence in the organisation’s commitment to ESG while reinforcing its reputation for responsibility.
This credibility is enhanced with the consistency brought by following a pre-defined standard reporting framework, such as that of the European Sustainability Reporting Standards which is applicable for entities falling in scope of the European Union (EU) Corporate Sustainability Reporting Directive (CSRD).
Is the concept of sustainability assurance gaining ground locally?
The demand for sustainability assurance is rapidly increasing, particularly within the EU, where regulatory developments are shaping how businesses disclose and verify their ESG commitments. The introduction of the CSRD has significantly influenced this shift, making assurance a legal requirement for many companies. Under the Directive, certain entities are obliged to ensure their sustainability reports are subject to limited assurance, with the possibility of stricter requirements in the future.
The CSRD has yet to be transposed in Malta, but more than a dozen large companies already fall within its scope and are preparing for its implementation. Same applies for the regulators. In parallel, auditors are investing in the necessary resources and equipping themselves to deliver sustainability assurance effectively from the word Go.
In this context, it is important to highlight that the statutory auditors handling sustainability assurance will need to be authorised to deliver these services and are therefore undergoing the necessary training to ensure high standards of professionalism, competence, and ethical conduct.
However, the road towards sustainability reporting is a very uneven one. While there has been a clear shift toward greater environmental and social responsibility, there is also increasing resistance and demand for simplification. Positions taken by the United States and far-right parties in Europe, and even recent proposals at an EU level, such as the Omnibus package, appear to dilute the momentum that was being gained in relation to the EU sustainability framework.
At this juncture, there is therefore a level of uncertainty as to what happens next. In this context, although the extent is yet to be determined, clearly, sustainability assurance plays a crucial role in ensuring businesses remain transparent, competitive, and resilient.
How does sustainability assurance tie in with ESG efforts? What are the risks of inaccurate sustainability reporting – and how does sustainability assurance mitigate such risks?
There is no doubt that the creation of established frameworks in this field will give more comfort to investors, the public and decision makers.
Organisations can benefit from all this, particularly if they can establish leadership in the ESG field. It is important to appreciate that sustainability assurance comes at the tail end of the reporting process. Companies need to build the necessary resources and ensure they have the necessary processes and procedures to collate the required data and that all the various teams from different departments are onboard and working together – this requires a company-wide strategy.
On the other hand, inaccurate sustainability reporting can mislead stakeholders, damage an organisation’s reputation, and lead to regulatory penalties or loss of investor confidence. It may also result in poor decision-making, misallocation of resources, and failure to address key environmental and social risks.
Sustainability assurance mitigates these risks by independently verifying data, in parallel reinforcing the organisation’s commitment to genuine sustainability practices.
What role does the MIA play in sustainability assurance?
The MIA has long played an active role in pushing forward the sustainability agenda at various levels. On a national scale, it has provided recommendations to authorities on implementing sustainability directives, helping also to bridge expectations between authorities and professionals. Within the accountancy community and the broader financial industry, our role is to raise awareness, educate, and support our members in preparing for evolving sustainability requirements.
We have also established dedicated working groups on sustainability, one of which focuses on sustainability assurance to assess industry needs and provide essential guidance and training. In particular, we are striving to deliver the message that sustainability is a holistic process—ultimately assurance is the final step following strategy development, implementation, and reporting. Achieving sustainability requires a firm-wide, strategic approach that reshapes operations and strengthens internal structures.
Sustainability LIVE Malta is set to take place on February 20, 2025, at the Mediterranean Conference Centre (MCC) in Valletta. For more information visit https://sustainability-live.com/sustainability-live-malta/
Xara Catering is proud to be the distinguished catering partner for Sustainability Live Malta, offering exceptional catering services while strategically aligning with critical Environmental, Social, and Governance principles to foster sustainable impact and uphold corporate responsibility.
