A summary of the Institute’s new assurance technical bulletin for ESG reporting

HKICPA’s Standard Setting Department

An overview of the Institute’s recently published guidance on environmental, social and governance assurance

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HKICPA’s Standard Setting Department


The Institute’s recently published Auditing and Assurance Technical Bulletin (AATB) 5 Environmental, Social and Governance (ESG) Assurance Reporting provides practical non-authoritative support material intended to assist practitioners in performing assurance engagements on ESG information. This article goes through the guidance.

Globally, there is an increasing demand for ESG information by investors and stakeholders who pursue long-term investment in sustainable and socially responsible companies. Since 2016, the Hong Kong Exchanges and Clearing (HKEX) requires all companies listed on the HKEX to issue an ESG report in accordance with its Environmental, Social and Governance Reporting Guide. In December 2019, the HKEX released an enhancement to the guide to strengthen the leadership role and accountability of the issuer’s board on ESG information. This became effective for issuers’ financial years commencing on or after 1 July 2020.

Paragraph 9 of the enhanced reporting guide encourages issuers to seek independent assurance to strengthen the credibility of ESG information disclosed. An issuer may choose to obtain external assurance for all or part of its ESG report. While optional, the HKEX states that where independent assurance is obtained, the issuer should clearly describe in the ESG report the level, scope and processes adopted for the assurance given. Issuers may decide whether to disclose the name of the assurance practitioner.

Chapters 1 and 2: Introduction and assurance framework

Chapter 1 introduces the purpose of AATB 5, which is to provide practical non-authoritative support material intended to assist practitioners in performing assurance engagements on ESG information. The basis of the reporting framework is Hong Kong Standard on Assurance Engagements (HKSAE) 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information, and with reference to the International Auditing and Assurance Standards Board’s Proposed Guidance: Extended External Reporting (EER) Assurance. It is tailored with reference to the ESG reporting circumstances in Hong Kong.

Chapter 2 provides practice guidance on particular challenges practitioners may face in performing assurance engagements on ESG information in accordance with HKSAE 3000 (Revised). The chapter also makes it clear that AATB 5 is not a substitute for HKSAE 3000 (Revised).

Chapter 3: Special features of ESG reporting

An ESG report is a way for entities to demonstrate their business activities in relation to their sustainability practices. This chapter describes some of the differences between financial statements and ESG reports. Including how, unlike for audited financial statements, there are no standardized report formats and structures in presenting ESG information, and that ESG reports may contain a diversity of information including qualitative and quantitative information.

Chapter 3 covers the different types of qualitative and quantitative information, differences between and similarities shared by popular ESG reporting frameworks, and reporting boundaries. It also discusses the board’s oversight of ESG matters, and how to identify important matters.

Chapter 4: Appropriate competencies and capabilities of the assurance practitioner

This chapter sets the conditions for engagement partners to be a member of a firm that applies Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and have appropriate assurance skills and techniques and to understand the underlying ESG subject matter and its measurement and evaluation.

The chapter also covers the responsibility of the engagement partner throughout the engagement, including in regards to the work of subject matter experts engaged to work on specialized subject matter.

Chapter 5: HKEX ESG reporting guide – Specific considerations

Performing ESG report assurance engagement involves collecting and evaluating evidence about the ESG subject matter against suitable criteria to arrive at a set of findings and conclusions. The entity and assurance practitioner should agree the objective and the scope of ESG information to be assured for the assurance engagement.

The chapter discusses the different requirements in the HKEX reporting guide, namely the mandatory and “comply or explain” provisions, and what practitioners should consider when accepting engagements.

Chapter 6: Level of assurance

Assurance practitioners can perform a combination of reasonable and limited assurance on different underlying ESG subject matters in the same assurance report. If the report contains different levels of assurance, these differences should be clearly differentiated and separate conclusions should be expressed.

HKSAE 3000 (Revised) allows certain flexibility for the responsible party, intended user and the assurance practitioner to agree the level of comfort that is relevant to the purpose of the ESG report. However, it also makes clear that the practitioner remains responsible for obtaining suitable evidence to justify their conclusions.

Chapter 7: Suitable criteria

Criteria are the benchmarks used by practitioners to measure or evaluate an ESG subject matter. During an engagement, the practitioner evaluates the ESG subject matter and provides their opinion on whether it is prepared in accordance with the applicable criteria. The chapter describes the characteristics of suitable criteria: relevance, completeness, reliability, neutrality and understandability.

Suitable criteria can be established with reference to regulations, industry, market and internal practices, and should be available to the intended users allowing them to understand how the ESG subject matter information has been measured or evaluated.

Chapter 8: Qualitative information

There is often a high degree of uncertainty inherent in the measurement or evaluation of underlying ESG subject matters, which gives rise to subjectivity in their measurement or evaluation and a greater range of possible measurement or evaluation outcomes than may typically be the case with historical financial information assurance engagements.

When underlying ESG subject matter cannot be measured and expressed in quantified terms, it may be more susceptible to being more reflective of, and more variable with, the views of those reporting it. Therefore, additional disclosure criteria may be needed.

The ESG subject matter information for some aspects may be expressed primarily in qualitative terms, rather than in quantified terms. This information may be factual (that is, directly observable) or inherently subjective. It is therefore particularly important that qualitative information is understandable (including being unambiguous as to its intended meaning) and neutral.

This chapter also includes examples of the types of ESG information practitioners may encounter, and specific considerations for assuring them.

Chapter 9: Future-oriented information

ESG reports may contain different forms of future-oriented information, such as that about future conditions or outcomes and an entity’s intentions or future strategy. This may include forecasts, projections, and information about future risks and opportunities.

Evidence may be available to support assumptions, but such evidence is itself generally future-oriented and, therefore, speculative in nature. This chapter explains some of the steps a practitioner should go to when conducting the engagement, including whether the entity has the capability to carry out the intent, there is a reasonable basis behind assertions, and whether assumptions are supported by evidence.

Chapter 10: Reporting

The practitioner should form a conclusion about whether they have obtained reasonable or limited assurance, as appropriate, about the ESG subject matter information. This evaluation should include consideration of the qualitative aspects of the entity’s quantification methods and reporting practices, including indicators of possible bias in judgements and decisions in the making of estimates.

This chapter includes the basic elements that an assurance report should include.

It is important that the practitioner complies with HKSAE 3000 (Revised) and any ESG subject matter-specific HKSAEs relevant to the engagement. Where an ESG subject matter specific HKSAE applies to only part of the ESG subject matter information, it may be appropriate to cite both that ESG subject matter specific HKSAE and HKSAE 3000 (Revised).


The appendices include guidance on the procedures in limited and reasonable assurance engagements, to help practitioners to plan their engagements. There are also illustrative examples of assurance reports on ESG information.

The article is contributed by the Institute’s Standard Setting Department

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