The assurance market of sustainability reports: What do accounting firms do?

The assurance of sustainability reports is a relatively new service offered by different providers such as accounting firms and consultants. The percentage of sustainability reports assured and the weight of the four largest accounting firms (Deloitte, EY, KPMG and PWC) in this new market are evolving in time. The purpose of this paper is to contribute to a better understanding of the role each one of the four major accounting firms (Big4) play in this assurance market. Using a generalized linear mixed model in an international sample, our results confirm that each Big4 accounting firm leverages its network of financial audit clients to enter the sustainability assurance market. Despite the global context in which Big4 operate, the choice of a specific Big4 as assurance provider depends on country level factors. We also find significant differences in the industry distribution for each major accounting firm. These results suggest a potential competitive advantage for the Big4 to enter the sustainability assurance market when they are also auditors of the financial statements. Our findings suggest that each Big4 does not act uniquely at a global level when they assure sustainability reports as there are characteristics in the geographical environment which affect this market. Additionally, the differences in market share of each Big4 by industry, may enforce the idea of the connection between financial auditor (a market highly specialized by industry) and the sustainability assuror.