Did you know that over 90% of consumers believe companies should be responsible for addressing environmental and social issues? With sustainability becoming increasingly important in business operations, it is crucial for organizations to prioritize their sustainability goals and align them with their audit framework.
Sustainability auditing plays a vital role in evaluating an organization’s environmental, social, and governance (ESG) performance. It helps identify risks, opportunities, gaps, and best practices for improving sustainability performance and reporting. By integrating sustainability into their audit framework, organizations can enhance transparency, accountability, and overall sustainability impact.
In this article, we will explore the importance of updating sustainability auditing skills, provide tips for professionals to stay current and impactful, discuss COSO’s guidance on integrating sustainability reporting, and delve into the integration of ESG into internal audit planning. Let’s dive in and discover how organizations can effectively integrate sustainability into their audit framework.
Tips for Updating Sustainability Auditing Skills
To stay up-to-date and relevant in the field of sustainability auditing, professionals need to constantly update their skills and knowledge. By following trends, learning new frameworks and tools, applying skills in practice, seeking feedback and improvement, and continuing to learn and grow, sustainability auditors can enhance their expertise and effectiveness. Here are some helpful tips:
- Follow trends and developments: Keep yourself informed about the latest trends and developments in the sustainability field by reading reports, blogs, and attending webinars and events. Reputable sources like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), International Federation of Accountants (IFAC), and International Auditing and Assurance Standards Board (IAASB) provide valuable insights.
- Learn new frameworks and tools: Take advantage of online courses and certifications to learn new frameworks and tools that are commonly used in sustainability auditing. Some essential ones include the GRI Standards, SASB Standards, and Assurance Standards.
- Apply skills in practice: Gain hands-on experience by getting involved in sustainability audits for organizations. Taking part in volunteer audit projects and offering audit services or consulting can also help sharpen your skills and deepen your understanding of sustainability auditing.
- Seek feedback and improvement: Regularly evaluate your performance and seek feedback from peers and stakeholders. Constructive feedback can help you identify areas for improvement and enhance your auditing capabilities. Creating a personal development plan can also guide your growth and progress.
- Continue learning and growing: An essential aspect of updating sustainability auditing skills is maintaining a commitment to learning and staying curious. Keep exploring new research, attending training sessions, and staying passionate about sustainability auditing.
COSO’s Guidance on Integrating Sustainability Reporting
COSO, the Committee of Sponsoring Organizations of the Treadway Commission, has released a new guidance called “Achieving Effective Internal Control of Sustainability Reporting (ICSR)” to enhance trust and confidence in ESG reporting and decision-making within enterprises. This guidance recognizes the significance of integrating sustainability and finance teams and recommends a multifunctional team approach to ensure robust control and governance processes over the collection, review, and reporting of sustainability information.
Emphasizing the importance of sustainability reporting, COSO highlights the need for organizations to consider different approaches based on their maturity in sustainability and ESG programs. These approaches include:
- Standalone reviews: Evaluating specific elements of the organization’s ESG program to assess their effectiveness and alignment with sustainability goals.
- Focused reviews: Providing assurance on key areas of sustainability reporting, enhancing transparency and accountability.
- Integrated audit approaches: Incorporating ESG-focused questions into the audit planning process to gain a comprehensive understanding of potential sustainability risks and opportunities.
- Investing in ESG competencies: Researching, monitoring, and upskilling auditors to enhance their knowledge and expertise in ESG topics, enabling them to effectively address sustainability risks and challenges.
In addition to these recommendations, COSO emphasizes the value of reporting technology in facilitating collaboration, ensuring data quality, and maintaining consistency in sustainability reporting. By following COSO’s guidance on integrating sustainability reporting, organizations can strengthen their internal control systems and effectively address sustainability risks, ultimately enhancing their overall sustainability performance and reporting.
Integrating ESG into Internal Audit Planning
Integrating ESG (Environmental, Social, and Governance) activities into an organization’s internal audit plan is crucial in today’s business landscape to meet the rising demand for increased visibility around ESG risk reporting. By prioritizing ESG risk and incorporating it into the audit plan, organizations can demonstrate their commitment to transparency, accountability, and sustainable practices.
There are four common approaches to integrating ESG into the audit plan:
- Standalone reviews: These reviews assess specific elements of the ESG program, allowing auditors to delve deep into individual components and evaluate their effectiveness.
- Focused reviews: These reviews provide assurance in key areas of ESG, such as climate change, diversity and inclusion, ethical sourcing, or supply chain sustainability, ensuring adequate attention to critical ESG issues.
- The integrated audit approach: This approach incorporates ESG-focused questions into audit planning documents, enabling auditors to gain a comprehensive understanding of potential risks and opportunities related to ESG factors.
- Investing in ESG competencies: To effectively integrate ESG into audit planning, organizations need to research, monitor, and upskill auditors in ESG topics. This investment empowers auditors to navigate the complexities of ESG reporting and evaluation more effectively.
By adopting these approaches, organizations can comply with regulations, avoid accusations of greenwashing, and enhance their overall ESG performance. Integrating ESG into internal audit planning ensures a holistic evaluation of sustainability practices, paving the way for improved risk management and a stronger foundation for responsible and transparent business operations.
Nathan Chambers is an audit management expert with over a decade of experience in developing and implementing robust audit strategies for organizations across diverse industries. With a keen eye for detail and a passion for driving operational efficiency, Nathan brings a wealth of knowledge to his writing, offering practical insights and actionable advice to help businesses excel in audit management.