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Influence of Sustainability Assurance on the Credibility of Corporate Reports in Nigeria

Abstract

Sustainability assurance has emerged as a vital corporate governance and reporting practice aimed at enhancing the credibility, reliability, and transparency of sustainability disclosures presented by organizations. Sustainability assurance refers to the independent verification and evaluation of sustainability reports by qualified external assurance providers to determine whether environmental, social, and governance (ESG) information has been prepared in accordance with recognized reporting standards and accurately reflects an organization's sustainability performance. As stakeholders increasingly demand greater transparency regarding corporate environmental stewardship, social responsibility, ethical conduct, and governance practices, organizations are adopting sustainability assurance to improve stakeholder confidence, strengthen accountability, and enhance the credibility of corporate reports. In Nigeria, growing awareness of sustainable business practices, increased regulatory attention to ESG reporting, and the adoption of international sustainability reporting frameworks have encouraged listed companies and large organizations to improve the quality and transparency of their sustainability disclosures. Regulatory institutions such as the Financial Reporting Council of Nigeria (FRCN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), and professional accounting bodies continue to promote high-quality corporate reporting and responsible corporate governance. Despite these developments, sustainability reporting in Nigeria continues to face challenges including inconsistent disclosure practices, greenwashing, inadequate assurance standards, limited expertise among assurance providers, weak stakeholder awareness, and insufficient regulatory enforcement, all of which may undermine the credibility of corporate reports. Although previous studies have examined sustainability reporting and corporate governance, empirical evidence regarding the influence of sustainability assurance on the credibility of corporate reports in Nigeria remains limited and inconclusive. Against this background, this study investigates the influence of sustainability assurance on the credibility of corporate reports in Nigeria. The study is anchored on Stakeholder Theory, Legitimacy Theory, and Signaling Theory. Stakeholder Theory posits that organizations enhance stakeholder trust and confidence by providing credible and independently assured sustainability information that addresses the information needs of investors, regulators, employees, customers, and the wider society. Legitimacy Theory explains that organizations utilize sustainability assurance to demonstrate compliance with societal expectations, strengthen corporate legitimacy, and maintain their social license to operate. Signaling Theory argues that independently assured sustainability reports serve as credible signals of an organization's commitment to transparency, ethical business practices, and high-quality corporate reporting, thereby influencing stakeholders' perceptions and decision-making. Collectively, these theoretical perspectives provide a comprehensive framework for explaining the relationship between sustainability assurance and the credibility of corporate reports in Nigeria. The study adopts a quantitative research design using a structured questionnaire administered to chief financial officers, sustainability managers, finance managers, internal auditors, external auditors, assurance practitioners, accountants, company secretaries, compliance officers, investor relations officers, and other personnel responsible for sustainability reporting and corporate governance within selected listed companies and large organizations in Nigeria. A stratified random sampling technique will be employed to ensure adequate representation of organizations operating in the financial services, manufacturing, oil and gas, telecommunications, consumer goods, industrial goods, agriculture, healthcare, and other sectors of the Nigerian economy. Sustainability assurance will be measured using assurance independence, assurance quality, assurance scope, compliance with sustainability reporting standards, assurance transparency, competence of assurance providers, stakeholder engagement, and verification processes, while the credibility of corporate reports will be measured using report reliability, transparency, completeness of disclosure, stakeholder confidence, information accuracy, report consistency, and perceived reporting integrity. Primary data collected from respondents will be analyzed using descriptive statistics to summarize respondents' demographic characteristics and perceptions regarding sustainability assurance and corporate report credibility. Structural Equation Modeling (SEM) will be employed to examine the influence of sustainability assurance on the credibility of corporate reports. The measurement model will be evaluated using Cronbach's Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), and Confirmatory Factor Analysis (CFA) to establish the reliability and validity of the research instrument. Additional diagnostic tests, including multicollinearity assessment, common method bias analysis, and model fit indices such as the Comparative Fit Index (CFI), Tucker-Lewis Index (TLI), Root Mean Square Error of Approximation (RMSEA), and Standardized Root Mean Square Residual (SRMR), will be conducted to ensure the adequacy, consistency, reliability, and robustness of the structural model. The study anticipates that sustainability assurance will have a significant positive influence on the credibility of corporate reports in Nigeria. Independent assurance of sustainability disclosures is expected to improve the reliability, accuracy, transparency, and completeness of corporate reporting while reducing information asymmetry, reporting bias, and greenwashing practices. Organizations obtaining credible sustainability assurance are also anticipated to strengthen stakeholder confidence, improve investor trust, enhance corporate reputation, facilitate informed investment decisions, and promote long-term organizational sustainability. Furthermore, effective sustainability assurance is expected to reinforce corporate governance, improve compliance with sustainability reporting standards, strengthen risk management practices, and enhance accountability to both shareholders and other stakeholders. Conversely, inadequate assurance procedures, limited professional expertise, weak regulatory oversight, inconsistent reporting frameworks, and low-quality assurance engagements may reduce the credibility of corporate reports, weaken stakeholder confidence, and undermine the effectiveness of sustainability reporting initiatives. Consequently, effective sustainability assurance is expected to contribute significantly to improving the credibility of corporate reports, enhancing stakeholder trust, strengthening corporate accountability, and promoting sustainable business practices in Nigeria. This study is expected to make significant theoretical and empirical contributions to the literature on sustainability accounting, corporate reporting, auditing, and corporate governance by providing comprehensive evidence on the relationship between sustainability assurance and the credibility of corporate reports in Nigeria. Unlike previous studies that broadly examined sustainability reporting or environmental disclosure, this research specifically evaluates sustainability assurance as a strategic determinant of corporate report credibility using primary data and Structural Equation Modeling (SEM). The findings will provide valuable insights for the Financial Reporting Council of Nigeria (FRCN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), professional accounting bodies, assurance providers, corporate organizations, investors, policymakers, regulators, and academic researchers regarding the strategic importance of sustainability assurance in strengthening corporate reporting quality. The study will also provide evidence-based recommendations for improving sustainability assurance practices, strengthening regulatory oversight, enhancing professional capacity, promoting the adoption of internationally recognized sustainability reporting and assurance standards, improving stakeholder awareness, and fostering greater transparency, accountability, and sustainability in corporate reporting in Nigeria.

Keywords: Sustainability assurance, corporate report credibility, sustainability reporting, environmental, social and governance (ESG), corporate governance, stakeholder confidence, assurance quality, Structural Equation Modeling (SEM), corporate reporting, Nigeria.