What is Impact Assurance?

Impact assurance refers to the process of independently evaluating an organisation’s disclosures about its performance, as well as its underlying systems, data and processes, against suitable criteria and standards to increase confidence in the information for use in decision-making.

Why is Impact Assurance Important?

In the evolving landscape of sustainability regulation, the need for robust impact assurance mechanisms has never been more pressing. Recent developments, such as the European Commission’s Corporate Sustainability Reporting Directive (CSRD), underscore this shift, signalling a new era where transparency and accuracy in sustainability reporting are paramount.

“Just as shareholders expect a financial statement to be audited, we believe that stakeholders should expect the same rigour and external scrutiny to be applied to information about sustainability and impact.” – Sarah Forster, CEO and co-Founder, The Good Economy

The Rising Demand for Impact Assurance

The CSRD and similar regulations are reshaping how organisations report on their impact and sustainability practices. From 1 January 2024, the European Commission introduced an EU-wide requirement for limited assurance on sustainability reports for all companies in scope of CSRD, with the end goal to move towards reasonable assurance in the longer term[1].

These regulations mandate clear and consistent reporting on environmental, social, and governance (ESG) factors, pushing companies to move beyond vague statements and provide concrete evidence of their efforts. This is where impact assurance comes into play. With the increased scrutiny on impact and sustainability disclosures, assurance has become a critical tool for building trust and credibility.

85% of investors say that reasonable assurance would give them confidence in sustainability reporting, to a moderate, large or very large extent.

Source: PwC’s Global Investor Survey 2023

Impact Assurance by The Good Economy

Independent scrutiny of impact processes and performance data is important for both learning and accountability, especially in a landscape where “impact washing” – the practice of overstating social or environmental benefits – can undermine genuine efforts and mislead stakeholders.

The Good Economy (TGE), a leading, independent impact advisory firm, is a licensed provider of the AccountAbility AA1000 Assurance Standard, the premier global benchmark for sustainability and impact reporting. Achieving AA1000 assurance provides stakeholders with certainty that your reporting meets the highest international standards. AA1000 not only assures data accuracy and reliability, but also the systems, processes, and practices which underpin an organisation’s overall impact and sustainability approach.

The ultimate output from an assurance engagement is an Assurance Statement, which includes an official AA1000 licensed report number. This Assurance Statement can be included within a separate publication (e.g. an annual report or a sustainability report or even a verification report like we produced for Snowball) or can exist as a standalone publication.

To date, TGE has assured sustainability and impact disclosures for funds with combined assets under management of over $3.5 billion.

What are the Benefits of Impact Assurance?

Clients are increasingly recognising the value that assurance brings to their reporting. To date, feedback from our clients regarding the benefits of assurance includes:

1. Enhanced Trust and Credibility: Assurance lends credibility to sustainability claims by providing third-party validation. This helps organisations build trust with stakeholders and investors who are demanding more transparency. This is particularly valuable in instances where reporting is reliant on relatively complex methodologies (e.g. in relation to monetised social value calculations).
2. Improved Data Quality: Assurance processes often lead to better data management and reporting practices which not only improves the accuracy of the information but also helps in identifying areas for improvement.
3. Better Decision-Making: Reducing the risk of inaccurate data or unsubstantiated impact claims
4. Risk Management: By identifying discrepancies or weaknesses in reporting, assurance helps organisations mitigate risks associated with inaccurate or misleading sustainability claims, including potential regulatory consequences.
5. Stakeholder Confidence: Assurance reassures stakeholders that the organisation is committed to genuine sustainability practices, enhancing their confidence in the reported social and environmental impacts. 

TGE’s Assurance Team

The Good Economy is proud to be leading the way in impact assurance. Grounded in theoretical rigour, our team has worked at the frontiers of impact investing, impact measurement and management and sustainable development. The Good Economy Assurance team includes team members who are qualified as certified sustainability assurance practitioners.

The Certified Sustainability Assurance Practitioners (CSAP) qualification, initially developed in 2007 by AccountAbility and the International Register of Certificated Auditors (IRCA), is the first internationally recognised professional qualification in the field of sustainability assurance. From January 2025, for an assurance provider to continue delivering assurance services using AccountAbility’s AA1000 Assurance Standard, it will be mandatory to have CSAP certified staff.

The accreditation of TGE’s team not only demonstrates our commitment to upholding the highest standards in sustainability reporting but also reflects the broader industry trend towards enhanced transparency and credibility. As we continue to navigate this evolving landscape, robust assurance practices will be key to fostering trust and driving genuine impact and sustainability progress.

To find out more about TGE could help your business with independent assurance, please get in touch.

[1] CSRD: Sustainability Assurance