New ICAI guidelines address sustainability assurance, greenwashing | Analysis

The language of business is no longer etched only in balance sheets. Financial statements are now increasingly moving beyond measuring what a firm earned to how earnings have come about, by analysing growth sustainability, the management of environmental and social risks, and the alignment of governance practices with stakeholder expectations.

Investors, regulators and society are now more cognizant of climate change, social inequalities, resource pressures, ethical concerns and governance failures, which can potentially influence a company’s long-term survival and value creation.

Unlike financial statements, which follow well-established accounting standards and audit processes, sustainability information is often collected using multiple methods with varying levels of verification, thus raising concerns about inconsistency, limited comparability and the plausible risk of greenwashing.