People
Alexander Gall - KPMG Partner
early adopter of ESG reporting
Claudia Schoenhart - KPMG Manager
Regulatory Framework
“some level of assurance” could also be just 1 KPI
like C-level renumeration tied to CO2 emissions
sus. reports grew from ~30 to ~100 pages
handling of financial data is very mature (50+ years) and simple
providing assurance is comparably simple as well
ESG data handling is not mature yet
has not been around long enough to be mature
no double-accounting paradigm for ESG data
archiving is a difficult topic too
some companies do other stuff too apart from ESRS and CSRD
CSRD is a directive → no obligation until transposed into national law
citizens and companies not affected until transposition is done
new CSRD give a lot more structure over ISAE 3000
IT tools for ESG are numerous
a lot will die out - there is a tool for everything
not yet 1 dominant tool or 1 industry standard
interesting stuff
just a file explorer/archiving solution or is much more data processing happening?
e.g. a carbon footprint processing tool
what are the inputs and the calculations/processes
reasonable assurance readiness assessment
do you have processes and systems in place to support reasonable assurance someday?
no guarantee that reasonable assurance will work out when the deadline hits
Assurance Sustainability Reporting has the power to close companies
lying about sustainabiltiy to get further credit
having to repay financing after fraud becomes public
insolvency
when reasonable assurance fails a lot of government regulation will follow
if there should be a serious case of Greenwashing in ESG reporting the regulations would be revisited
site visits
where is data coming from - really understanding how the process works and what data is coming from where
depends on regional differences and on the people
can be friendly and open with some topics, but not with others
some just want to get it over with and don’t want to work with you at all
e.g. measure waste water values to proof the values of the client are correct
sustainability auditing requires a lot more travelling than financial audits
Politics
important for companies: should they prepare reports (a lot of costs are involved)
if it is not mandatory I might as well wait for a year
focus is currently on bigger issues: taxes and budgets
no wins/losses with doing something you would have to anyways
sustainability reporting is low on the priority list
possibility that nobody will talk about it and it will just be passed
minimum requirements - resources needed in other places
possibility that AT government waits for DE governments decision
DE will most likely have a different government too
possibility that new government(s) requests changes from EU
Auditors approach & conclusion
forming conclusion is very structured and formal
processed by lawyers and experts how to formulate every single detail
Risk Management
media research
googling “company + issue”
e.g. “Microsoft greenwashing”
if not included in report → questions
Double Materiality Approach
general questions - understand scope
how whey have done Due Diligence
identify IRO s and KPI s
find out how IRO s are captured and transferred into KPI s
asses KPI outcome
Key challenges - practical examples
under ESRS no quantitative data may have omissions
check for completeness required
Q&A / Discussion
who are you talking to exactly in the companies?
C-suite (whoever is responsible for sustainability)
different managers - whoever has important information
e.g. won’t ask finance dept about biodiversity
mostly those people are spread across a lot of departments - there is normally not 1 sustainability department
HR does social matters mostly
The better you can read a persons mind the better of an auditor you are
for the change to reasonable assurance to happen one needs to proof that being sustainable has benefits - otherwise the companies will protest heavily because of extra incurred costs for no benefit
different ways to enforce reasonable assurance other than just requirements for everything
e.g. if CEO renumeration is linked to sustainability KPIs
e.g. if green bonds are listed on the stock market