Improving ESG reporting frameworks for better decision making

A large global producer of distributed energy has engaged BDO under a Master Service Arrangement (MSA) for internal audit services.

After sharing our ESG internal audit and advisory experience with the client, BDO was specifically engaged to perform an ESG internal audit.

The purpose of the ESG internal audit was to review and assess the adequacy and effectiveness of the processes and controls in place for compiling the annual ESG data submission for the client's shareholders (who are listed on an international stock exchange and make public ESG disclosures). This review aimed to provide confidence in the efficiency of the process and the integrity of the data submitted annually to shareholders.

Delivery

A joint team consisting of Risk Advisory Services and Sustainability Advisory delivered the engagement, to provide the appropriate mix of internal audit and technical sustainability reporting skills. The audit involved collaboration with personnel locally and internationally, ensuring a comprehensive understanding of the processes and controls in place to collect, review, challenge and report ESG related data, including for:

• Environmental data (i.e. with a particular focus on GHG, air emissions, waste, and water); and
• Social data (i.e. community spend, economic impact).

Outcome

Recommendations were made to enhance the client’s ESG reporting framework and address identified gaps through the creation of a data management roadmap and improvement plans to ensure that the client complies with the listing rules of the relevant international stock exchange. 

Most importantly, our team added value by:

• Educating Executive Leadership and Management about best practices relating to ESG reporting;
• Identifying errors in prior reporting submissions and systemic process issues that lead to the errors; and
• Identifying opportunities and making recommendations to enhance ESG data collection and reporting processes for the purposes of annual disclosures, other regulatory compliance regimes, and to support better internal decision making.

The co-delivery of the engagement by Risk Advisory Services and Sustainability Advisory provided confidence to the client that a thorough internal audit was performed, while also providing the subject matter expertise for commercial outcomes.