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How ESG Assurance Builds Investor Confidence
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How ESG Assurance Builds Investor Confidence

As the demand for responsible investment grows, ESG assurance will remain a cornerstone of sustainable finance, providing investors with the confidence they need to back projects that deliver lasting impact

October 19, 2025
5 min read

Key Takeaways

  • ESG assurance is essential for building investor trust beyond financials.
  • The sustainable bond market is expanding, with social bonds playing an increasingly important role.
  • Regulatory rollbacks in the EU make assurance even more valuable as a voluntary signal of credibility.
  • For Bangladesh, ESG assurance is a pathway to unlocking international capital, supporting both green and social development priorities.

As the demand for responsible investment grows, ESG assurance will remain a cornerstone of sustainable finance, providing investors with the confidence they need to back projects that deliver lasting impact.

The Trust Factor in Sustainable Investments

In today’s investment landscape, environmental, social, and governance (ESG) factors are central to investor decision-making. Investors want credible assurance that companies are addressing climate risks, respecting human rights, and practicing good governance. Without third-party verification, there is always a risk of greenwashing or social-washing.

ESG assurance provides that independent verification, ensuring companies’ sustainability claims are trustworthy. By aligning disclosures with reality, assurance builds confidence and enables investors to make informed choices in line with the rapidly growing sustainable bond market, which surpassed USD 4 trillion in cumulative issuance by 2024 (Climate Bonds Initiative, 2024). Notably, social bonds like financing healthcare, housing, and education, now represent over USD 600 billion in issuance (ICMA, 2024), with strong growth in developing countries such as India, Brazil, and China. For example, the State Bank of India issued a USD 1 billion certified green bond in 2018, Brazil’s BNDES backed social infrastructure bonds in 2023, and Chinese provincial governments continue to issue public housing social bonds (China Development Bank, 2022–2024).

Why ESG Assurance Matters for Investors

Transparency and Trust

Investors demand data that is both accurate and comparable. ESG assurance validates not only environmental disclosures but also social commitments (labor rights, gender equality, community impact) and governance structures (board diversity, anti-corruption). This transparency builds lasting investor confidence.

Risk Reduction

Environmental disasters, labor disputes, or governance scandals can all erode shareholder value. ESG assurance signals that companies are actively mitigating these risks, making them more attractive to long-term investors.

Competitive Advantage

Companies with assured ESG reporting are perceived as leaders, often enjoying better investor relationships and financing terms. For example, SBI’s green bond received global recognition for transparency (Climate Bonds Initiative, 2019), Brazil’s BNDES used sustainability-linked bonds to attract social infrastructure financing (BNDES Report, 2023), and China’s social bonds market has exceeded USD 45 billion in issuance for housing and healthcare projects (Asian Development Bank, 2024).

ESG Assurance in Action

Surveys show a clear trend: according to PwC’s 2023 Global Investor Survey, 87% of institutional investors consider ESG disclosures critical, but only 25% trust unaudited data.

Academic research supports this. Tang et al. (2024) found that ESG assurance directly improves firm valuation (Journal of Sustainable Finance & Investment), while Gao & Chen (2024) demonstrated that non-professional investors are more likely to invest when ESG disclosures are independently verified (Sustainability Accounting Review).

Why ESG Assurance is Essential for Bangladesh

For Bangladesh, a climate-vulnerable and socially dynamic country, ESG assurance is vital not just for green finance but also for social bonds in healthcare, housing, and education. Strong governance verification further reassures international investors wary of transparency gaps. By embracing assurance, issuers can access global capital flows while demonstrating alignment with both climate resilience and social equity goals.

The Changing EU Regulation Landscape

Until recently, the EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD/CS3D) were expected to expand sustainability reporting across thousands of firms. But under the 2025 EU Omnibus package (European Commission, 2025), both frameworks have been scaled back and delayed:

  • CSRD: Now applies only to very large firms (>1,000 employees and €50m+ turnover or €25m balance sheet), excluding about 80% of companies originally in scope (European Commission Fact Sheet, 2025; Jones Day, 2025). Implementation has been delayed two years, assurance remains limited, and disclosure requirements are streamlined.
  • CSDDD (CS3D): Threshold raised to >1,000 employees and €450m+ turnover, with narrower supply-chain due diligence and non-EU coverage limited to firms exceeding €450m EU turnover (Clifford Chance, 2025).

While this reduces compliance costs, it also means that voluntary ESG assurance will become a critical differentiator. With fewer mandatory rules, investors will rely even more on independent verification to separate genuine sustainability performance from overstated claims.

References
  1. Arifin, F. (2024). Analisis Dampak Pengungkapan Sustainability Reporting Terhadap Kepercayaan Investor [Sustainable Reporting and Investor Confidence].
  2. BDO. (2023). ESG Assurance: A Competitive Differentiator. Retrieved from https://www.bdo.com/insights/assurance/esg-assurance-a-competitive-differentiator
  3. Climate Bonds Initiative. (2024). Sustainable Debt Global State of the Market 2024. Retrieved from https://www.climatebonds.net/resources/reports
  4. Climate Bonds Initiative. (2019). Green Bond Highlights 2019: India. Retrieved from https://www.climatebonds.net/resources/reports
  5. European Commission. (2025). Omnibus Package: Reducing Reporting Burden and Boosting Competitiveness [Press release]. Retrieved from: https://finance.ec.europa.eu/news/omnibus-package-2025-04-01
  6. Gao, Y., & Chen, L. (2024). The Proof Is in the Pudding: How Does Environmental, Social, and Governance Assurance Shape Non-Professional Investors’ Investment Preferences? Evidence from China.
  7. ICMA. (2024). Sustainable Bond Market 2024 Update. International Capital Market Association. Retrieved from https://www.icmagroup.org
  8. Jones Day. (2025). EU Omnibus Package Published: CSRD and CS3D to Be Delayed and Scaled Back. Retrieved from https://www.jonesday.com/en/insights/2025/02/eu-omnibus-package-published-csrd-and-cs3d-to-be-delayed-and-scaled-back
  9. Pong, C., & Man, T. (2024). The Influence of Environmental, Social, and Governance (ESG) Perception on Investor Trust and Brand Relationship Quality: A Study Among Retail Investors in Hong Kong.
  10. PwC. (2023). Global Investor Survey 2023: Investors, Sustainability, and Trust. PricewaterhouseCoopers. Retrieved from https://www.pwc.com/gx/en/services/investor-survey.html 
  11. PwC. (n.d.). Four Advantages to Gain from ESG Assurance. Retrieved from https://www.pwc.com/us/en/services/esg/library/4-advantages-sustainability-assurance.html
  12. Rudianto, H., et al. (2024). Sustainable Investment Strategies: Analyzing the Interplay Between ESG Ratings, Dividend Policy, Financial Performance, and Investor Trust.
  13. Tang, J., et al. (2024). The Mediating Role of Investor Confidence on ESG Performance and Firm Value: Evidence from Chinese Listed Firms.
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