Assurance in Sustainability Reporting: Evidence from Japan

The last two decades have witnessed significant improvement in sustainability reporting (SR) around the world (KPMG, 2013). While accountability to the external stakeholders should be the basic premise of SR, a number of observers have criticized the credibility and completeness of such reporting to ensure transparency and accountability (O’Dwyer & Owen, 2005; Adams, 2004; Adams & Evans, 2004). SR is observed as an important tool to manage the powerful stakeholders and ensure corporate legitimacy (Deegan & Unerman, 2011). The provision of assurance1 in SR can enhance the credibility of reporting and thereby can ensure the accountability and transparency to the stakeholders (Dando & Swift, 2003). In fact, there has been a steady increase in third-party assurance in SR in the last ten years. While in 2002, only 29% of leading global companies had purchased such assurance service, the adoption rate was increased to 59% in 2013 (KPMG, 20132).