Auditing sustainability – Ventigence weighs in
Sustainability has been in the spot light of corporation, regulators and think thanks in the recent years. It closely aligns with the overall rethinking of corporate responsibility and a potential shift from shareholder to stakeholder capitalism.
Senior management of certain organisations have made bold statements about the existence and effectiveness of their sustainability framework. However, Internal Audit and the Board struggle to get a grasp on how to conduct a credible attestation of these claim
Sustainability as a value proposition
Organisations have realised that they can reshape and/or revitalise their corporate image by developing and implementing a sustainability framework.
One would ask how sustainability can give an edge to organisations over their competitors?
Sustainability can be a differentiation strategy by impacting:
- Potential customer base
- Both institutional and retail investor base
- Image among creditors
- Environmental footprint etc.
Sustainability claims sound shallow without audit assurance
Management’s assertions on sustainability without either in house internal audit (IA) or third-party independent assessment do not carry the same weight.
These audit engagements can reassure the board and the public that the organisation is not involved in so called: “Greenwashing”. Greenwashing occurs when an entity tuns being environmentally friendly into a “Just for Show” activity. This means that most of the effort and funds are spent on building a green corporate image than on actually minimising the environmental footprint.
Challenges in auditing the sustainability framework
One has to recognise that current sustainability frameworks are either being created or in early stages of implementation. As result, IA has to develop its own methodology to assess existence, effectiveness and efficiency of internal controls built into these frameworks. IA also has to evaluate whether the organisation’s existing environmental certifications like: LEED (Leadership in Energy and Environmental Design), TRUE Zero Waste certification etc., if any, are part of a well-structured sustainability framework or just a bunch of random and potentially siloed initiatives.
The credibility of any internal or third-party audit would require the auditor to gain an in depth understanding of various sustainability frameworks and best practices. This specialised knowledge should be obtained prior to the scoping and planning of any audit engagement.
How we would approach auditing sustainability?
Our firm, Ventigence has the corporate philosophy that we do not audit anything unless we have the at least one operational professional certification in the specific domain.
What does this mean for auditing sustainability?
Ventigence will actively engage in auditing the sustainability frameworks, once we obtain GARP’s Sustainability and Climate Risk (SCRTM) Certificate.
How would you approach auditing your organisation’s sustainability framework?
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