The Consequences of Sustainability Report Assurance: A Literature Review

Sustainability assurance is increasingly being used as a tool to enhance the credibility of corporate sustainability reports. The purpose of this paper is to synthesize findings from studies in sustainability assurance, particularly focused on the consequences of sustainability assurance. Based on a review of 190 articles from 2005-2024, this paper summarizes and analyzes key findings regarding the characteristics and motivations of firms that acquire assurance, the theoretical frameworks used in the literature, the types of assurance acquired by firms, and the impact of assurance on stakeholder trust, quality of reporting, and financial performance. The key findings suggest that (1) the decision to acquire third-party assurance is driven by governance structures, industry affiliation, institutional and societal pressures, and financial attributes, with larger firms and those in stakeholder-oriented countries more likely to adopt assurance, while cost concerns and weak regulation deter it, (2) in general, sustainability assurance enhances credibility and reduces information asymmetry in sustainability reporting, however, challenges remain related to independence, scope, and potential symbolic use, (3) in general, sustainability assurance enhances firm value, reduces cost of capital, and boosts investor confidence, though its financial impact varies by industry, assurance quality, and market perception, (4) firms seek third-party assurance primarily to enhance legitimacy and maintain stakeholder trust, but high costs and perceived lack of value can hinder adoption. Overall, the paper focuses on the consequences of sustainability assurance, revealing helpful findings to firms that acquire assurance. The paper concludes by suggesting areas for future research.