There has been a steady increase over the past 15 years of companies providing environmental, social, and governance (ESG) information through integrated or stand-alone reports. Established reporting criteria have evolved over the past 20 years, but appear to be converging toward a global standard that may result in integrated reports that contain financial statements and ESG information becoming the norm. Despite the many positive benefits of standalone ESG report assurance, particularly when the assurance provider is a CPA firm, the current landscape of ESG assurance in the United States is dominated by non-CPA firms.
However, increasing pressure by investors and other stakeholders to include ESG information in integrated reports, alongside financial reporting, elevates the incentive for CPA firms to provide assurance on ESG information in addition to financial reporting and internal controls. We provide theory and empirical evidence on the effects of (1) the type of assurance provider (CPA firm vs. non-CPA firm with subject matter expertise) and (2) whether or not the assurance provider discloses the use of its employed subject matter experts (i.e., environmental specialists) as part of its engagement team (absent vs. present) on investors’ confidence and trust in ESG information contained in integrated reports.