Corporate green reports: do independent checks really help companies deliver measurable action?

KEY TAKEAWAYS Corporate sustainability assurance carried out by independent auditors helps detect greenwashing. The EU’s Omnibus reform is narrowing the scope of mandatory sustainability reporting, which means fewer companies will have to seek independent assurance of their environmental claims. The association between external assurance and lower emissions is stronger among companies facing greater stakeholder pressure, suggesting that external scrutiny helps strengthen corporate accountability. The European Union’s Omnibus reform has exempted most of the companies it once covered from mandatory sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). It has also dropped plans for tougher “reasonable” assurance checks on green claims, which come closer to a full audit. Meanwhile, ISSA 5000, the new global standard for sustainability assurance, takes effect for reporting periods beginning on or after December 15, 2026, in jurisdictions that adopt it or issue a national equivalent, such as Hong Kong and Brazil. Timelines vary: Australia’s equivalent was applied in January 2025, while Canada’s (CSSA 5000) starts on December 15, 2027. At a time when companies have never been more vocal about their green credentials than they are today, is sustainability assurance considered red tape or a climate tool? Calling out corporate greenwashing The gap between what firms say and what they do has a name: greenwashing, and courts and regulators across Europe are increasingly calling it out. One remedy is an independent verification of sustainability reports, known as “assurance”. An outside firm, often one of the Big Four accounting groups (Deloitte, EY, KPMG and PwC), checks a company’s sustainability report, just as auditors would check a company’s accounts. International standards now cover both what companies should report and how those reports should be checked. Does verification go with lower emissions? In our study, published in the Journal of Accounting Literature, we analysed data on large listed companies in 34 countries from 2002 to 2019, a period when sustainability reporting assurance was largely voluntary. We compared the greenhouse gas emissions of firms whose sustainability reports were independently verified with those firms whose reports were not. The most important finding concerns green promises. Many companies run programmes to cut emissions, but the results differ mainly by sustainability assurance. Among firms with verified reports, such initiatives were associated with greater emission reductions. Among firms whose reports were not independently checked, more initiatives were linked to higher emissions, a pattern consistent with greenwashing. Without scrutiny, it seems, some climate action is more about image than impact. The pattern held when one of the Big Four did the verification. Does stakeholder versus shareholder orientation matter? The effect of assurance also depends on where a company operates. In “shareholder” systems, such as the US and the UK, companies are run first and foremost in the interest of their investors. In “stakeholder” systems, such as France and Germany, employees, communities and regulators have a stronger say. In both countries, employees even sit on company boards. The link between assurance and lower emissions was strongest among stakeholder economies. In shareholder-first systems, the evidence was more mixed. Our interpretation is that a verified report carries more weight when many stakeholder groups are watching and able to act on it. Verification provides the facts; outside pressure gives them teeth. Furthermore, the link was stronger in heavily polluting sectors such as mining and construction, and in countries with weaker environmental laws. This suggests independent verification can partly fill the gap left by lax regulation. What recent cases show Real cases show both the value and the limits of verification. TotalEnergies’ sustainability report was verified by two of the Big Four firms, EY and PwC, appointed by shareholders in 2024. Yet in October 2025, a Paris court partly upheld a complaint by three NGOs (Greenpeace France, Friends of the Earth France and Notre Affaire à Tous). It ruled that the oil major had misled consumers about its ambition to reach carbon neutrality by 2050. In Britain, PwC checked HSBC’s reported progress toward its goal of providing $750 billion to $1 trillion in sustainable finance. But in 2022, the Advertising Standards Authority banned two HSBC posters, one touting that goal, for omitting that the bank was still financing heavily polluting industries. In Germany, asset manager DWS was fined €25 million in 2025 after prosecutors found that its claims of leadership in sustainable investing did not match reality. Its former head of sustainability, Desiree Fixler, had blown the whistle, and DWS admitted its past marketing was “sometimes exuberant”. These cases echo our findings. Verification checks whether a report’s numbers are accurate, not whether a company’s marketing tells the whole story. And in each case, activists, NGOs or insiders raised the alarm. In France, the law recognises such groups’ right to defend collective environmental interests in court. This is the kind of stakeholder pressure that, our study suggests, makes third party sustainability reporting assurance more worthwhile. Red tape or climate tool? Our evidence points to a climate tool, but not a silver bullet. In our study, verified companies emitted less, and their green initiatives were more likely to deliver. Yet assurance appears to work best alongside stakeholder pressure, such as scrutiny by employees, communities, campaigners and courts. That matters for Europe. Exempting many companies from mandatory reporting means fewer firms will have their climate claims independently checked. Those outside the rules can still choose verification, a credible signal that they mean what they say. And as ISSA 5000 is adopted, it should make assurance more consistent. Assurance alone may not stop greenwashing. Without it, though, green promises are much harder to trust. A weekly e-mail in English featuring expertise from scholars and researchers. It provides an introduction to the diversity of research coming out of the continent and considers some of the key issues facing European countries. Get the newsletter!