DBT consultation on an oversight regime for assurance of sustainability-related financial disclosures

We refer to the invitation to comment on the Department for Business and Trade’s consultation on developing an oversight regime for assurance of sustainability-related financial disclosures. We appreciate the opportunity to contribute our investor perspective on a possible voluntary registration regime for assurance providers and the long-term direction for assurance of UK SRS disclosures.

Norges Bank Investment Management (NBIM) is the investment management division of the Norwegian Central Bank and is responsible for investing the Norwegian Government Pension Fund Global (the fund). NBIM is a globally diversified investment manager with 19,754 billion Norwegian Kroner at end 2024, of which 1,137 billion (ca GBP 80 billion) invested in the United Kingdom. As a long-term investor, we consider our returns over time to be dependent on sustainable economic, environmental and social development, as well as on well-functioning, legitimate and efficient markets. We are active investors in over 65 countries and require reliable, consistent, and comparable financial information across global capital markets.

We strongly support the ISSB as the global baseline of investor-focused standards for sustainability-related financial disclosures. The ISSB standards share the same conceptual foundations as the International Accounting Standards Board (IASB) financial reporting standards. Investors will be able to receive sustainability-related financial information that is concurrent, connected and complementary to financial statements. This is critical for us to formulate a holistic view of a company’s performance and prospects over different time horizons and inform our investment decisions, risk management processes and stewardship activities.

Sustainability disclosures should be subject to similar governance procedures as financial disclosures, with a final signoff from the board. For investors to confidently use sustainability-related financial information, it needs to be readily accessible and subject to similar quality controls as other information that companies provide to financial markets, where applicable. A growing number of corporates are obtaining external assurance on their sustainability reports, and several jurisdictions have adopted or are considering mandatory assurance requirements. Whilst we currently rely on our portfolio companies’ internal governance process to enhance the reliability of their disclosures, we believe that external assurance has a key role to play in improving reliability and bringing sustainability-related financial disclosures on par with financial statements. We support the use of the International Standard on Sustainability Assurance 5000 (ISSA 5000) issued by the International Auditing and Assurance Standards Board for the purposes of such external assurance. Basing assurance practices on a global standard will enhance investors’ trust and confidence in sustainability-related financial disclosures across jurisdictions and help mitigate greenwashing risks. We welcome the standard’s flexibility in accommodating both limited and reasonable assurance engagements, and its profession-agnostic nature for use by both professional accountants and other assurance practitioners.

We agree with the government’s proposal to create a voluntary registration regime for sustainability assurance, as a starting point towards establishing mandatory assurance requirements in the future. The future registration regime could increase transparency on providers’ qualifications for companies seeking to engage a sustainability assurance provider. However, we believe that given the high level of voluntary sustainability assurance among FTSE 250 companies, UK authorities could consider a more ambitious approach and directly introduce mandatory assurance requirements, rather than a voluntary opt-in regime as an intermediate step. A practical approach could be to introduce mandatory assurance one or two reporting cycles after the introduction of mandatory sustainability reporting, to allow firms to get familiar with SRS-aligned reporting in the first place. The scope of such mandatory assurance could also be limited to a selected number of metrics, such as GHG emissions reporting, and broadened over time.

We thank you for considering our perspective and remain at your disposal should you wish to discuss these matters further.

Yours sincerely,

Carine Smith Ihenacho
Chief Governance and Compliance Officer

Elisa Cencig
Head of Policy Engagement