Title: Strengthening Trust in Sustainability Disclosures: The Case for Greater Regulation of Third-Party Assurance

A government consultation has been launched to gather views on a proposed expansion of regulatory oversight for third-party assurance services related to sustainability-focused financial disclosures. The move signals a heightened focus on the reliability, comparability and accountability of the information that companies report about environmental, social and governance (ESG) performance. As investors, policymakers and business leaders weigh the implications, the central question is whether more robust oversight will genuinely improve decision-making, reduce greenwashing, and level the playing field for organisations across sectors.

Why this matters for markets and stakeholders

Sustainability disclosures are increasingly embedded in corporate reporting and investment analysis. When third-party assurance is involved, the objective is to provide independent verification of the information presented, lending credibility to claims about climate risk, resource use, supply chain practices and other material ESG factors. However, the quality and consistency of assurance can vary widely, which in turn can affect how much confidence stakeholders place in the disclosures. The consultation recognises a potential gap between intention and outcome: without strong regulatory guardrails, assurance might improve in theory but fall short in practice.

For investors, the reliability of ESG disclosures directly influences capital allocation decisions. Inaccurate or opaque assurance statements can obscure risk, distort assessments of performance, and slow the flow of capital to genuinely sustainable strategies. For companies, the integrity of their disclosures can affect cost of capital, stakeholder trust and competitive positioning. For assurance providers, clearer standards of independence, competence and reporting can help define a sustainable business model and reduce disputes over scope and quality. Regulators, in turn, are balancing the benefits of oversight against potential burdens on firms, especially smaller organisations with limited resources.

What the proposal could cover (and why it matters)

The consultation seeks views on a package of potential enhancements to regulatory oversight. While the exact design is still under consideration, respondents might encounter considerations such as:

– Independence and objectivity: Strengthening rules around the independence of assurance providers and their teams to minimise conflicts of interest and enhance the credibility of reports.
– Qualifications and ongoing competence: Establishing minimum qualifications, continuing professional development requirements, and criteria for registering or approving assurance professionals who specialise in sustainability disclosures.
– Quality control and methodologies: Codifying expectations for audit-quality processes, methodological rigour, and appropriate engagement planning to ensure consistent application across industries.
– Reporting and transparency: Requiring clearer, more comparable assurance statements, with disclosures about scope, limitations, materiality, and the level of assurance provided (e.g., reasonable vs. limited assurance).
– Oversight framework: Defining whether oversight will be conducted by a dedicated regulator, through a statutory registration regime, or via enhanced supervisory arrangements with existing bodies, including reporting and enforcement mechanisms.
– Public registries and accountability: Considering public registries of approved providers or assurance engagements to improve visibility and accountability.
– Alignment with international standards: Ensuring coherence with global frameworks and standards to support cross-border comparability and reduce duplicative burdens for multinational organisations.

The potential benefits a strengthened framework could bring

– Increased reliability: More robust oversight can raise the overall quality of assurance, making disclosures more trustworthy and decision-useful for investors.
– Greater comparability: Consistent standards and clearer reporting can help users compare sustainability performance across peers and sectors with greater ease.
– Reduced greenwashing risk: By tightening expectations around assurance, companies may be deterred from overstating ESG achievements, leading to more accurate portrayals of risk and progress.
– Improved capital allocation: Investors may be better equipped to price ESG-related risks and opportunities, supporting a smoother transition to more sustainable business models.
– Enhanced resilience and governance: The process can encourage stronger governance around sustainability information, including board and audit committee involvement.

Important considerations and potential challenges

– Cost and access: There is a risk that higher regulatory and quality-control requirements could increase costs, particularly for smaller firms or those in complex, high-risk sectors. The design will need to consider proportionate requirements to avoid unintended barriers to entry or market exit.
– Global consistency: Markets are increasingly globalised. Fragmented or divergent regulatory regimes could create friction for multinational entities unless there is a path to coherent international alignment.
– Innovation versus rigidity: Overly prescriptive rules might dampen the development of more efficient or innovative assurance approaches. A balance will be required between minimum standards and flexibility for professional judgement.
– Scope and materiality: Determining the boundaries of what must be assured (e.g., all sustainability metrics versus a core set of material disclosures) will influence the cost-benefit profile of the regime.
– Transition and capability building: If new standards are introduced, organisations will need lead time and support to build the necessary capabilities in assurance services, internal controls and governance processes.

Actions for organisations and individuals preparing to respond

– Assess impact: Firms should evaluate how stronger oversight could affect existing reporting processes, assurance provider choices, and costs. Consider where quality gaps currently exist and how they might be addressed.
– Gather evidence: Collect data on the costs and benefits of potential changes, including impacts on small and medium-sized enterprises, and potential timescales for implementation.
– Engage with stakeholders: Engage boards, audit committees, investors, assurance providers and professional bodies to gather diverse perspectives on practical design and implementation issues.
– Align with standards: Review how proposed requirements align with international frameworks (for example, IAASB standards for assurance, the ISSB’s sustainability disclosure standards, and related guidance) and identify areas where alignment would reduce complexity.
– Prepare responses: When providing feedback, emphasise concrete examples, scenarios, and potential impacts on governance, reporting timelines and investor relations.

Who should pay attention and why

– Corporate boards and audit committees: to understand implications for governance, assurance scope, and resource allocation.
– Assurance providers and professional bodies: to anticipate regulatory expectations, identify training needs, and shape market practice.
– Investors and asset managers: to gauge how changes may affect the reliability and comparability of disclosures they rely on for risk assessment and investment decisions.
– Regulators and policymakers: to balance tightened oversight with practical deliverability and international coherence.

Looking ahead

The consultation represents a meaningful step in shaping how third-party assurance for sustainability-related disclosures is governed. While there is potential for clearer, more credible reporting, the design will need to be proportionate, future-facing and globally harmonised where possible to avoid unnecessary burden. Stakeholders are encouraged to engage actively, provide evidence-based input, and consider both the opportunities and the challenges that a strengthened regulatory framework could present.

If you are involved in reporting, assurance, investment or policy development, your views can help shape a regime that improves confidence in sustainability disclosures while supporting prudent, orderly market functioning. The consultation documents are available through the government channels, and responses are welcomed from organisations of all sizes and from those with direct experience of sustainability reporting and assurance.

Bottom line

Regulatory oversight of third-party assurance for sustainability disclosures has the potential to elevate trust and improve decision-making in capital markets. Achieving the right balance between rigour and practicality will be key, as will alignment with international standards and a transparent, consultative process that considers the needs of a diverse range of stakeholders. Your engagement now can influence a framework that supports both robust governance and economic vitality in the sustainability era.

January 30, 2026 at 11:00AM
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本次咨询就政府提出的加强对第三方在可持续性相关财务披露领域提供的鉴证服务监管的提议征求意见。

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