In recent months climate change has rarely been out of the news, and as a result businesses are considering the role it should play in their decision making and reporting.
Following the announcement of a new International Sustainability Standards Board (ISSB), companies are now expected to account for the impact of their activities on the climate and to report on it. Two recent studies have focused on the role of audit. Are auditors, internal and external, doing enough to support progress and hold companies accountable?
First up is a Deloitte Global Survey, which concluded that audit committees are falling behind expectations when it comes to addressing climate change. 70% of respondents stated that their committee had not completed a climate change assessment, and 42% were disappointed in their organisation's climate response. With 60% saying they did not regularly discuss climate change, and 47% admitting to not being climate literate, there is clearly still a long way to go.
When asked what was preventing greater focus on the climate change issue, respondents cited a lack of clear strategy, inadequate global reporting standards, and poor management information, as the main obstacles. Deloitte’s main recommendations focused on better education on climate change, improved management information and making sure that corporate strategy is aligned with climate change goals.
A second survey, this time from the Chartered Institute of Internal Auditors (IIA), focused on internal auditors and whether they are doing enough to ensure companies are 'climate ready'. 52% of the 122 Chief Audit Executives (CAEs) that were surveyed admitted to doing little or no work concerning climate change, and 53% had not yet discussed the issue with their audit committee chair. The IIA suggests that internal auditors could have a significant impact on climate change practices and should therefore increase their focus on this area.
It seems that whether you are in internal or external audit, you would be well advised to place a higher priority on the measurement and monitoring of the climate impact of your activities.
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