How can internal audit add value in the Environmental, social, and corporate governance (ESG) space?

In a previous article by Schneider Downs on ESG, they summarized the key stakeholders in the ESG puzzle, what their roles are, and why they are important. This article will go a little deeper into the specific role of Internal Audit in ESG engagements.

In ESG, the role of the audit practitioner is to provide a company’s key stakeholders (the board, the investment community, etc.) with an objective assessment of governance, processes and procedures, and underlying data to support espoused objectives. The auditor’s assessment helps to strengthen the claims made by the company in the eyes of others in the ESG community, including investors, ratings agencies, and underwriters.

Pragmatically speaking, internal audit can help with the following:

1. Prepare the Sustainability Team, Management, and the Board for limited and reasonable assurance of GHG emissions and other key data points via a readiness assessment
2. Verify that processes and controls exist and that they are audit-ready
3. Review public-facing disclosures for potential areas of concern to be addressed

Primary Drivers for Internal Audit’s Involvement in ESG evaluations

A practitioner’s evaluation helps to add a layer of credibility to a company’s publicly reported data and statements. Some of the primary drivers for internal audit’s involvement in ESG evaluations include:

Environmental, Social and Governance Resources

• Schneider Downs ESG FAQ
• Schneider Downs ESG Infographic - Putting the ESG Puzzle Together
• Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG?
• Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees
• Schneider Downs ‘Our Thoughts On’ ESG Articles