Environmental, Social, and Governance: A New Landscape

Author: Pat Patterson

Environmental, Social, and Governance (ESG) – What is it?

The E of ESG information is about environmental issues. These issues include how a company manages risk and the exposure, which is related to climate, natural resource scarcity, pollution, waste, and other environmental factors, as well as a company’s impact on the environment

The S of ESG information is about social issues. These issues include information about the company’s values and business relationships. Social topics include supply-chain information and labor, the quality and safety or products, human capital topics such as, employee health and safety, inclusion and diversity endeavors, and the policies around them.

The G is the governance piece of ESG. Governance includes information about a company’s corporate governance. This could include information on the board of directors and its structure and diversity; compensation of executives, how the entity manages critical event responsiveness; corporate flexibility, and the corporate practices and policies concerning lobbying, political contributions, bribery, and illegal acts.

Why does a company report ESG information?
ESG reporting can enable companies to:
Tell about their key ESG risks, opportunities, and management of the same;
Tell about progress on the company’s commitments to the environment and society;
To show how the company’s ESG strategy helps for all owners;
To increase confidence in leadership’s ability to prioritize and push ESG commitments.

Publication Date: April 2022

Designed For
Users and makers of ESG information should attend. This includes investors and other stakeholders who are seeking clarity about ESG movements. Also, users who demand quality, accurate, and reliable information. In 2019, sustainability info was submitted for third-party assurance.by 29 percent of S&P 500 companies.

Topics Covered

• Background Information
• Environmental Issues
• Climate Related Matters and Management's Policies
• Management Responsibilities
• Governance Responsibilities
• Audit Impacts
• Auditor Responsibilities
• Risks Assessment and Responses
• Risks Assessment and Responses/ Examples
• Audit Procedures Responding to Assessed Risks
• Laws and Regulations
• Audit Evidence
• Opinion and Reporting
• Key Audit Matters
• Other Information in Annual Reports
• Attestation Impacts
• Materiality in Attestation
• Performing Procedures
• Reporting on Attestation Engagements
• Examination Report Examples

Learning Objectives

• Recognize how to communicate ESG requirements and standards
• Describe background information on ESG
• Identify issues regarding ESG
• Recognize the impacts ESG has on GAAS and attestation
• Identify what is not a likely area an auditor needs to know about management's policies and procedures that are unique to climate related matters
• Recognize examples of which kind of factor includes the degree of competitiveness within the industry, customer preferences, supplier relationships, and technological developments
• Differentiate ASU Sections and how they apply
• Describe examples of climate-related matters that could raise substantial doubt about an entity's ability to continue as a going concern

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Accounting (1 hour), Auditing (1 hour)

Program Prerequisites
None

Advance Preparation
None