On top of a myriad of factors that can disrupt business operations, including a changing business environment and economic uncertainties that stir global financial markets, businesses are now increasingly concerned about how they can help address environmental issues, and for good reason. The effects of climate change are more apparent, with a study released by the UN’s World Meteorological Organization (WMO) showing that in 2021, greenhouse gases, the primary cause of climate change because they trap heat within the atmosphere, spiked to hit new record levels. They warn that these levels will continue to rise through 2022.
These environmental issues are cause for alarm, and has triggered increased participation from government, non-governmental organizations, and businesses to join hands in preventing further environmental damage through sustainability initiatives.
In our previous article, we talked about how to successfully create champions that promote sustainability practices employed in the workplace. There, we mentioned how vital it is that all personnel realize that they all play a part in reversing climate change effects. This comes in the form of engagement in small measures that when practiced continuously, help contribute to attain bigger environmental goals like reducing carbon emissions.
Engaging in sustainability initiatives has become a need instead of an alternative or add-on initiative. In the Philippines, results of Grant Thornton’s International Business Review show that 42% of Philippine mid-market firms surveyed are ready and likely to invest in sustainability reporting and initiatives.
But while many firms have expressed willingness and are keen to jump in when it comes to promoting sustainability, the tricky part is: how and where to start?
Engage in sustainability reporting
As more companies put sustainability at the heart of their corporate governance policies, they reap several benefits, the most valuable of which is the improvement of their brand’s reputation and goodwill. For those operating in countries where rules about sustainability, or environmental, social, and governance (ESG) programs are set, the immediate benefit is being able to comply with such rules. But, as they comply and fully embrace sustainability or ESG, the more rewarding and fulfilling benefits and gains come their way. They also become more active and diligent in measuring and accurately reporting the impact of their business undertakings to people, the environment and the economy.
Like other leaders in various professions, assurance and advisory professionals now have bigger roles to play when it comes to making advances in ESG initiatives within their firms. This responsibility entails leading by example and inspiring clients, other businesses, and stakeholders who are ready to do more in terms of sustainability or ESG to adopt similar programs and comply with standards.
One specific area in which sustainability advisors and assurance providers alike can help is in sustainability reporting. This comes in the form of preparing proper disclosures outlining the activities and choices companies make to engage in and promote sustainability. As regulatory oversight becomes stricter, the sustainability advisor’s role extends to providing insights on whether a company’s sustainability report includes quantitative and qualitative data that are not only reflective of ESG pursuits, but are also accurate, relevant, and timely. A McKinsey article described sustainability reporting as one which includes company disclosures that detail “frameworks and standards to follow, which stakeholders to address, and which information to make public”.
Make headways through borderless collaboration
Assurance leaders now perform an integral function to assist in making transparent sustainability reports. And they can achieve more when they collaborate with stakeholders and other audit and advisory professionals.
This imperative is not solely the responsibility of audit and assurance professionals. Businesses that are part of a larger business network or group likewise gain more by sharing best practices with other entities comprising the network or group. Free flow sharing of innovative ideas and strategies fosters continuous learning, opens new avenues for filling in knowledge gaps, and helps leaders improve decision-making.
Share analyses, audit approaches
Jumping in on this discussion, Grant Thornton leaders emphasized in an article that audit and assurance leaders must show renewed commitment to share internally global audit data analytics approaches currently being developed and “to start dedicating resources focused on how to deploy data analytics better in their firm”. This initiative matters most in the mandatory audit of sustainability reports.
Their role also includes suggesting new sustainability programs that client companies can invest in, particularly those that involve audit data analytics other than those already existing and recommended by their internal strategy group.
The onslaught of bigger environmental issues calls for more drastic actions. Effective collaboration coupled with the commitment to share best practices and spark continuous learning to be able to better comply with sustainability or ESG standards are key. We are far from fully addressing the looming climate crisis, but the sooner we make conscious efforts to combat it, we are a step closer to reaching this goal.
As published in The Manila Times, dated 09 November 2022