Sustainability assurance: an emerging market for the accounting profession

The purpose of this study is to examine firm-specific characteristics that influence firms’ choice of assurance provider in sustainability assurance. The market for sustainability assurance consists of three types: accounting firms (particularly the Big 4 firms), non-accounting specialist consulting firms (that specialise only in sustainability issues) and non-accounting general consulting firms (that provide general advisory/consulting services).

Using a sample selected from the top 100 publicly listed companies in the UK and USA that published a sustainability report in 2010 and 2011, respectively, for which assurance was obtained, a multinomial logistic regression model is applied by regressing the three types of assurance providers on firm size, leverage, profit, liquidity, percentage of strategic shareholding and two control variables – country and year.

The results indicate that the choice of sustainability assurance provider is related to firm size, profitability, liquidity and country.

There may be relevant variables omitted from the empirical analysis; results of this study may not be able to be generalized beyond the sample selected; and the sample size is relatively small.

Sustainability assurance is a viable assurance service that the accounting profession can provide.

This study helps in identifying the types of firms that are likely to demand assurance services provided by accounting firms.