Like many investors, we read the ESG reports of our Canadian banks with the expectation that they provide accurate, reliable, and complete information. While a number of banks rely on audit firms to provide limited assurance on the quality of their reporting, we believe it would be appropriate for the Bank to review the assurance level of its report in order to avoid increasingly common greenwashing allegations. According to a recent PWC report13: “In Canada, only 8% of companies in our analysis subject their sustainability reporting to the same level of reasonable assurance as their financial statements”, and as per the authors of this report: “Limited assurance is a good first step. But it’s only an interim measure in the
eyes of regulators and investors. Our Global Investor Survey 2022 explored the factors that increase confidence in assessing the accuracy of an organization’s sustainability reporting. Nearly three quarters (73%) of investors in Canadian companies say reasonable assurance helps. By contrast, only 46% feel the same way about limited assurance—underscoring the importance of preparing for reasonable assurance and producing investor-grade ESG reporting.” We believe that reasonable assurance every three years could reassure all stakeholders about the quality of the information disclosed.“A practitioner can provide two types of assurance engagements: a reasonable assurance engagement or a limited assurance engagement. The nature, timing and extent of procedures performed in a limited assurance engagement is limited compared with that necessary in a reasonable assurance engagement, but is still planned to obtain a level of assurance that is, in the practitioner’s professional judgment, meaningful14.”