ESG Information Reporting
Today’s socially conscious investors, customers and recruits are considering a company’s sustainability and environmental, social and governance (ESG) activities in their decision-making process. In a time of renewed interest in climate change, political leanings and equality and inclusion, companies are adopting ESG strategies to appeal to investors, consumers and potential employees. Investors are incorporating sustainability criteria into their investment decision analysis and requesting companies report and disclose additional information about their ESG strategies.
ESG reporting covers a wide range of behaviors and activities, including labor policies, product safety, environmental impact, data security, corporate governance and diversity. Investors want to know how companies are including ESG strategies in their business plans to enhance long-term sustainable performance and ultimately, shareholder value. As such, smart businesses recognize the need to be transparent and report ESG and sustainability information that is accurate and correct in order to avoid missteps or misrepresentation in the public eye.
Typically, the SEC is not requiring companies to report ESG information with the exception of certain corporate governance and industry regulated ESG metrics. However, companies are reacting to public inquiries and requests to disclose ESG information and outline the investment value proposition and sustainability of the company.
Recognizing the importance of reporting accurate information and avoiding embarrassing oversteps, backlash and reputational damage, companies are engaging CPA firms to validate the information that they intend to report and the systems and processes used to generate the information. Independent assurance by a CPA firm enhances the credibility of the information presented by companies to investors and others in the community.
Based on the level of assurance a company’s board of directors desires, our team can design an ESG information reporting engagement in accordance with attestation standards established by the AICPA. Testing procedures performed will result in the issuance of an examination report. In some cases, we conduct limited assurance procedures with result in the issuance of a review report.
In addition, we can provide advice to clients relative to systems, processes and internal controls to gather the respective ESG information. We also can assist in determining the scope of the report and methods of reporting based on standards set by the Sustainability Accounting Standards Board (SASB) and/or the Global Reporting Initiative for Empowering Sustainable Decisions (GRI).