In business, the concept of auditability is mainstream, although it is seldom discussed outside the financial realms of a company. That is, until now. As climate and ESG reporting expand worldwide, ensuring audibility and assurance becomes paramount.
Why Ensure Your Climate Data is Auditable?
Investors, regulators, and other stakeholders are requesting climate or ESG data for a multitude of reasons. Many are broadening their view of a business from only financially material information as we have seen in the past. As the world confronts crisis, there’s a growing realization: Non-financial information is crucial for informed decision-making.
When financial regulations and reporting became standard, auditing and assurance followed suit in the business world. Stakeholders and governments require the ability to trust and verify the disclosed information, which is the rationale behind it. By having an external accountant provide assurance or conduct an audit, you can trust the information to make crucial decisions, such as investment decisions.
Some regulations, such as the CSRD in the EU, ask for this data to be reported alongside financial statements. This data will be treated with the same level of rigor as those financial statements. Incoming regulations, such as the much anticipated SEC Climate Rules in the United States, will require limited assurance followed by reasonable assurance shortly after.
Even if you don’t currently have reporting obligations for disclosures, you may soon. Taking the time to not only prepare through voluntary reporting but also ensure that your reports are auditable or have them voluntarily assured will prepare your company. You don’t want to get caught with a heavy fine and bad data.
Difficulties for Auditability of Climate and ESG Data
New Processes
For many, this is a new type of data and way of thinking than what you are used to. Financial data has been reported for a long time now and those dealing with it have been trained in the most efficient ways to work with it.
Take carbon accounting, an important part of climate and ESG reporting. Even with individuals on your team with expertise in this space, there can still be a learning curve when using this data to make business decisions. From forecasting for the future to understanding which emissions factors to use, working with this data, ensuring it is high quality, and being able to use it to make decisions can take time.
Different Data Sources
Unlike financial data, the data being used in this non-financial reporting comes from many sources. From utility bills, human resources, your supply chain, and more, many different departments will need to be involved in gathering this data.
When gathering and consolidating this data, if done manually, you may lose traceability of data. If the data needs to be audited, the lack of an audit trail will prove to be an issue.
Stressful Deadlines
When regulations come into place, so do reporting deadlines. The time you have to gather your data, transform it, and report on it will be minimal especially if you need to have an external audit performed and have your data assured. If your team is not familiar with this type of reporting it becomes even more difficult to work against the ticking clock with fines for non-compliance on the line.
Ensuring Auditability
What if there was a secret button that could make your reporting journey easier, ensuring your data is auditable and easing the time it takes to get there? ScriptString is that secret button.
With a built-in audit trail and the ability to get all your data straight from the source, you can rest easy that you will be ready for audit and assurance. Even better, if this is your first time reporting to specific regulations our AI assistant will be there to help you every step of the way. From ensuring you meet all of the requirements to making sense of your data and establishing recommendations for future improvements, we are on this journey together.
Contact us today to see the ScriptString magic for yourself and achieve audit-ready climate compliance the next time you report.
