Last week, a group of 27 “climate, environment, and consumer protection organizations representing millions of members and supporters” sent a letter to the Public Company Accounting Oversight Board (PCAOB) urging the PCAOB to
“… update attestation standards to meet the needs of auditors, companies, and investors as they adapt to growing market demands and new regulatory requirements for third-party verified greenhouse gas (GHG) emissions and climate-related disclosures in 10-K filings. Given California’s new climate-related disclosure laws, the pending finalization of the SEC’s climate-related disclosure proposal for public companies, and the widespread demand for high-quality environmental, social, and governance (ESG) information more generally, we urge the PCAOB to provide specific guidance and oversight of firms issuing attestation reports on GHG emissions and climate-related disclosures in 10-K filings. The PCAOB is scheduled to update its attestation standards in 2024, and it is crucial that this revision incorporates GHG emissions and climate-related disclosures.”
The letter also makes this point, which is accurate:
“Currently, there is a lack of standardization around limited and reasonable assurance engagements of sustainability disclosures which has resulted in market confusion about the quality and reliability of the resulting disclosures.”
I discuss this issue in upcoming podcasts, so keep an eye out. In the meantime, companies planning on having their climate disclosures assured need to carefully consider their plans. Assurance letters are getting more scrutiny than ever because engagement, data and procedure limitations are becoming more publicized. It is riskier than ever to assume that “an” assurance is good enough.
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