An ESG audit, also known as ESG Assurance, is an assessment of the risks involved with ESG; the purpose of the audit is to provide a comprehensive analysis of a business’s ESG performance. It also includes what a business is doing from an ESG perspective and identifies areas of improvement which can include improving their environmental impact.
What does the environmental review cover?
With the environmental pillar, an ESG audit looks at how the business treats the planet. It asks questions such as, are they putting procedures in place to reduce their carbon footprint? Are they making the swap from using non-renewable energy sources to renewable? The ESG audit will also ensure that the business is not greenwashing as they will have to disclose all sustainability efforts and will therefore be unable to make false claims.
How is the social pillar assessed?
The social pillar examines how the business treats its employees and the wider community, with the goal of ensuring long-term wellbeing for all. During the audit, the business will be assessed on whether the business is incorporating key actions into their operations such promoting diversity and inclusion, which meet the ESG criteria.
What is reviewed under governance?
In an ESG audit, the business will be questioned whether it is practicing responsibly. This includes a close examination of governance structures and policies to ensure that the business is only promoting ethical behaviour and practices. The audit will evaluate how well these structures support accountability and fairness, which helps to ensure that a business is operating in alignment with the ESG standards.
