How Audit Committees can drive action on sustainability
The financial consequences of delayed action on climate and nature are becoming increasingly clear for business: transition costs, uninsurable assets, supply chain disruptions and more. Long-term resilience and financial value creation will depend on how effectively these risks and opportunities are managed today.
As part of our ongoing Audit Committee Dialogue series, Chapter Zero and A4S brought together Audit Committee Chairs and members to explore:
- The link between climate and nature
- The audit committee's role in overseeing controls and assurance over sustainability-related information
- How frameworks (such as the Taskforce on Nature-related Financial Disclosures recommendations) can be used to guide consideration of climate- and nature-related matters
The discussion also examined the use of AI in structuring sustainability data, lessons from the insurance industry on risk measurement, and how to position nature as a driver of value creation.
In response to the discussions, the following questions were designed to help audit committees challenge management, the board and fellow committee members on governance, risk, assurance and reporting:
- Are climate- and nature-related risks being translated into financial effects and clearly integrated into financial reporting?
- Do we have a robust end-to-end control environment for climate- and nature-related information, including data governance, clear ownership and evidence for key judgements?
- Is our assurance model fit for purpose, with internal audit and external providers demonstrably competent on climate and nature?
- Are our disclosures complete and decision-useful, and do they include credible explanations for baseline changes and estimates?
This roundtable is the third in our Audit Committee Dialogue series, delivered in collaboration with Chapter Zero.
