ESG Assurance in the United States

We provide the first, large sample evidence on third-party verification of firms’ environmental and social metrics in ESG reports (“ESG assurance”) in the United States. Focusing on S&P 500 firms from 2010-2020, we document a striking increase in ESG assurance, such that assurance rates are converging to peer countries. Unlike financial audits, ESG assurance varies widely in form and substance, including the choice of metrics assured, the level of assurance, and assuror identity, among others. We show that firms’ decision to obtain ESG assurance is primarily driven by their adoption of ESG reporting frameworks, such as GRI, and to a lesser extent, peer effects. The firm characteristics documented in prior literature — which primarily uses international settings and early periods — play a minor role.