Enviromental
What is the environmental aspect of ESG
The environmental factor in the ESG equation focuses on how a company performs as a steward of nature. It considers how a company uses natural resources and how their operations impact the environment. It includes not only a company's direct operations, but also all activities across their supply chains.
What is the social aspect of ESG?
This term refers to the ethical treatment of all stakeholders, including a company's workforce, suppliers, customers, the communities in which a company operates, and society as a whole.
What is the governance aspect of ESG?
The governance segment of ESG encompasses corporate board and management structures, company policies, standards, information disclosures, auditing, and compliance issues.
How will you test ESG?
Substantive Procedures
What is an ESG Report
It is a report published by a company separately from the financial statements to show their performance in each ESG category.
This aspect focuses on how companies use natural resources and how the company perfomrs as a steward of nature
Environmental Reporting
This ESG factor emphasizes the importance of a safe working environment that promotes equal treatment between gender, race, and ethnicity.
What is "Social Responsibility"
What are some categories included in governance?
Business ethics, Board composition, Incentive structures, Tax strategy, Corporate leadership, etc...
What is the current reporting needs for ESG under GAAP or Auditing Standards?
Nothing, optional presentation and disclosure.
What is ESG
Environment Social Governance reporting, or push towards a more green, equitable work environment that promotes sustainability and growth towards the future.
This ESG Factor emphasizes the importnace of a safe working environment that promotes euqal treatment between gender, race, and ethnicity.
What is Diversity and Workplace Policies
Greenwashing, Fraud, Noncompliance, etc...
What are some policies currently in place internationally about ESG?
In January 2023, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD), which requires EU and non-EU companies with activities in the EU to file annual sustainability reports alongside their financial statements
What part of ESG is most important for board members?
Governance
This corporate movement evolved as some management teams wanted to focus on reducing their firm's environmental impacts beyond what was legally mandated.
Corporate sustainability
Qualitative
What is a company's organization that rules over governance and compliance with their bylaws.
In-house counsel, internal audit.
What test would you perform for carbon emissions ?
Substantive Procedures test of details for completeness and accuracy.
What is the most important part of ESG for the average investor?
Depends on the person.
This innovative outdoor products company is a leader in ESG in the US.
Yeti
Which international body is leading the way in implementing mandator ESG reporting requirements?
What is the European Union
Why is governance important?
Governance is important because it includes the financial statement accuracy, audit quality, and board members compensation, which impacts the F/S more than other ESG measures.
What are some of the biggest problems regarding the audit procedures of ESG?
Lack of guidance, Measurement of ESG value to the company, trying to figure out if ESG audits will change anything in terms of the financials, etc...
What are some policies or laws that currently affect companies, schools, groups that are related to ESG?
Title IX, Equal Pay Act of 1963, Title VII of Civil Rights Act of 1964, etc....