We trust newspaper reports more than press releases because they provide (ideally) objective information on the topic and verify the ideas presented in a press release. The same is true for sustainability reports.
Third-party statements check the veracity of both financial and non-financial reporting – so your readers and benchmarking organizations know your reports are accurate – as well as identifying problems in your report preparation methodology or it underlying data, which improves your overall sustainability program.
Assurance, Verification, Alignment… Let’s Use The Same Definitions:
Part of the confusion with these processes is the inconsistency in use. While they are both used, in this instance, to describe data check processes, the terms are used interchangeably in colloquial discussions. Let’s get these definitions straight:
Assurance: data check process that requires the same methodologies and standards as financial data and must be performed by an accredited auditor.
Verification: data check process used when reviewing non-financial data and collection processes compared against predefined criteria; does not require a formally accredited professional, but is generally executed by a third party.
Alignment: an established methodology (e.g. a rationale for how it was prepared, what was included and excluded, and why these decisions were made) that a report follows.
Investment Grade Certification: A new way to ensure that sustainability reports follow a particular format and the data is verified. With all the existing reporting formats and certifications, it’s difficult to compare building performance while sorting through various formats. Investment Grade Certification clears the clutter to only compare reports that are of the same format and quality to pinpoint portfolio performance comparisons.
What’s the Difference Between Verification, Assurance, and Alignment?
Assurance and verification are often confused because they are both data checking processes. Verification can only be provided for non-financial data (since there is no “standard”) and does not need to be performed by an accredited professional. When reports are verified, the data itself has been checked, but often the calculations and analyses made on the reports have not undergone the same accuracy assessment.
Assurance, however, confirms that reports are held to the same standard as financial data, which has stricter standards than non-financial data and must be performed by an accredited third party auditor (such as pWc, LRQA, or Deloitte). Reports with assurance will have all calculations, data collection and analysis processes, and data quality checked.
Alignment is the most stringent of the three third party quality checks. Alignment requires a specific methodology for the reports, an explanation on why key decisions were made, and ensures all information provided is accurate.
Why Assurance and Verification Matter
Third party assurance and verification providers ensure your reports – both financial and non-financial – are of the highest quality and accuracy. These processes can also improve your benchmarking performance.
Having your reports are assured or verified can increase your scores with both GRESB and CDP. GRESB provides additional points for having your energy, GHG, water, and waste data assured or verified; as of the 2019 Assessment, GRESB assigns the same points for assurance and verification (even though the processes are different). For CDP, the verification or assurance of both Scope 1 and Scope 2 emissions is mandatory in order to achieve A-List status.
The Next Step: Investment Grade Certification
The market seems to be flooded with an overabundance of certifications; many of which simply cause clutter without adding value. To clear the noise, sometimes, you have to add a new, all-encompassing solution.
Investment Grade Certification is a new way to certify that your data and reports are of the highest quality. The first round of certified reports will be released this year. Stay tuned for more updates on Investment Grade Certification coming soon.
This article has been updated to reflect a change in the GRESB Real Estate Assessment scoring methodology in 2019.