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SDG & ESG Assurance

Sustainability Reporting is practice of reporting Concept of SD is named after Brundtland report

publicly on economic, environmental & social
impacts & its contributions – positive or negative – 3 pillars of sustainability & their elements
towards sustainable development (SD). It is info 1. Environment (E) - Climate Change, Natural
that co. provides about its performance to outside Resources, Pollution & Waste & Environment
world on regular basis in structured way. It is Opportunity
comprehensive mechanism of measuring &
disclosing sustainability data with performance 2. Social (S) - Human Capital, Product Liability,
indicators & mgt disclosures Stakeholder Opposition & Social Opportunity.
It addresses relationships with people &
Expected Benefits – institution in community of your business
• It helps entities to focus on long-term value
creation, by addressing ESG issues 3. Governance (G) - Corporate Governance &
• Investing in social & environmental issues will Corporate Behaviour. It is internal system of
improve business continuity practices, controls, & procedures entity
• It helps stakeholders to understand orgs adopts to govern itself
performance v/s sustainability & impacts
ESG reporting can be quantitative (metrics, KPIs)
& qualitative (strategy, policy) in nature

SD GOALS Global Trends in Sustainable Reporting

Division for SD Goals in UN Dept of Economic & • Mandatory reporting for public sector co.,
Social Affairs provides substantive support large co., MNC conglomerates & listed co
• Most widely used framework in world is
Following are 17 SD Goals - Global Reporting Initiative Sustainability
No Poverty; Reduced Inequalities; Zero Hunger; Reporting Standards having 93% of world’s
Sustainable Cities & Communities; Good Health & largest 250 co. report on their sustainability
Well Being; Responsible Consumption & Production; performance through GRI. This independent
Quality Education; Climate Action; Gender international org is based in Amsterdam,
Equality; Life Below Water; Clean Water & Netherlands
Sanitization; Life on Land; Affordable & Clean
Energy; Peace, Justice & Strong Institutions; 1. Global Reporting Initiative – economic,
Decent Work & Economic Growth; Partnership for environmental & social impacts
Goals; Industry Innovation & Infrastructure 2. Carbon Disclosure Project – GHG emissions,
water, forests & supply chain
Co. contribute to above goals through innovative 3. International integrated reporting framework
solutions

6 Cs of Integrated Reporting United Kingdom

1. Financial Capital - Pool of funds available to UK ESG disclosures for annual reporting apply to
org for production of goods or services. listed co. or co. turnover exceeding £500 million
Obtained via financing (debt, equity, or or co. having > 500 employees
grants)/generated via operations/
investments

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 SDG & ESG Assurance

2. Human Capital - People’s skills & experience, Business Responsibility & Sustainability Report
capacity & motivations, including – (BRSR)
• Alignment with org’s governance Applicable to Top 1,000 Listed Co.
framework & ethical values
• Ability to understand & implement org’s 3 sections -
strategy A. General Disclosures - Details of listed co., its
• Loyalties & motivations for improving products, services, holding, subsidiary etc
processes, goods & services B. Mgt Process & disclosures – Governance &
Leadership
3. Intellectual Capital - Key element in org’s C. Principle-wise performance disclosures – 2
future earning potential, investment in R&D, Categories KPIs
innovation, HR & external relationships • Essential indicator (Mandatory disclosure)
– Less efforts – E.g. membership of org
4. Natural Capital - Input to production of goods • Leadership indicator (Optional disclosure)
or services. Org’s activities also impact – More efforts – E.g. inputs in meetings
natural capital. Includes water, land, minerals
& forests, biodiversity, & ecosystem health Methodology to provide assurance on BRSR
• Preliminary Review of ESG report
5. Social Capital - Institutions & relationships • On-site Assessment/Verification of ESG
b/w community, stakeholders & networks to Report
enhance individual & collective well-being. • Submission of findings of on-site assessment
Includes – & doc review
• Common values & behaviour • Review of responses & clarifications on
• Key relationships, trust & loyalty findings
• Org’s social license to operate • Preparation of Assessment/Verification
report including final results
6. Manufactured Capital - Seen as human- • Issuance of Assessment Report & Statement
created, production equipment & tools.
Available for production of goods/services

9 Principles of BRSR
2 of Environment, 3 of Social & 4 of Governance

Principle 1 – Ethics, Transparency & Principle 3 – Promote well-being of all employees

Accountability - core elements - including those in value chain - core elements -
• Entities’ governing structure shall develop • Entities shall prevent child, bonded &
policies ensuring that ethics is not involuntary labour
compromised • Entities shall respect dignity of employee as
• Info of policies shall be made available to human being & not restrict their freedom of
stakeholders associations
• Entities in value chain shall adopt these • Entities shall ensure that work-life balance is
principles not compromised
• Entities shall proactively respond to outside • Skill & career development & training of
entities that violate 9 principles of BRSR workforce is responsibility of entities
• For adverse effects, give more transparent • Entities shall ensure timely payment of wages
disclosures • Payment of wages shall be as per living wages
providing basic needs & economic security

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 SDG & ESG Assurance

Principle 2 – Safe & Sustainable Goods & • Entities shall create safe, hygienic, &
Services - core elements - comfortable workplace
• Entities shall reduce over exploitation of • Creation of workplace that is free of
resources by methods of reduce, reuse & harassment & violence is responsibility of
recycle entity
• Entities shall educate & aware its consumers • Entity shall comply with all regulatory
& clients about their rights requirements of employees
• When product is designed in way to minimize
resource usage to make it sustainable

Principle 4 - Respect for stakeholders’ interests Principle 5 - Respect & promote human rights -
& responsiveness - core elements - core elements -
• Entities shall determine their operation & • Entities shall have understanding of human
identify interested parties rights & ways by which human rights can be
• Entities shall be transparent & communicate violated
with stakeholders about impacts of • Entities when developing Mgt systems, shall
operations & business decisions on people & integrate human rights element into policies
nature • Businesses shall recognize & respect human
• Entities shall fairly share benefits to rights of all relevant stakeholders
stakeholders

Principle 6 – Protection & restoration of Principle 7 – Influence on Public & Regulatory

Environment - core elements - Policy
• Entities shall contribute for climate change • Core elements to have met when org go ahead
resilience as per India’s commitment with contributions to policy formulation &
• Entities shall use natural & manmade advocacy
resources in optimum manner • Collective associations like trade groups &
• Entities shall compare its activities with industry chambers be utilized for policy
industry best practices to reduce, reuse & advocacy & formulation
recycle resources • Role in policy advocacy shall encourage fair
• Entities shall measure performance for competition & prevent human rights abuses
prevention of pollution, waste generation etc
• Entities shall look ways to improve
performance for environment responsibilities
• Entities shall have policies to assess & rectify
impacts to environment

Principle 8 – Promote Inclusive Growth & Principle 9 – Provide value to consumers in

equitable development - core elements - responsible manner - core elements -
• Entities shall identify & address impacts of • When designing & marketing products, org
its activities on social, cultural & economic shall not prevent freedom of choice & fair
aspects of people competition
• Entities shall review adverse impacts & make • Entities shall transparently disclose adverse
action plans to mitigate them impacts to user, planet, society, on
• Entities shall ensure that displacement of biodiversity from products
communities does not happen & in unavoidable • Entity shall reduce negative impacts of
products on people, environment & society

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 SDG & ESG Assurance

cases, provide fair compensation to affected • When advertising products, orgs shall ensure
people that misleading & confusing info is not
• Entities shall bring creative products to help exposed to customers
marginalized communities with well-being & • When handling customer data, right to
better quality of life privacy shall be maintained
• Entities when designing CSR activities shall • Entities providing essential goods & services
help marginalized communities shall enable universal access
• All forms of intellectual property & • Entities shall inform customers on safe ways
traditional knowledge shall get respect from of usage, reuse, recycling & disposal of
org products & eliminate over-consumption
• Entities shall have transparent & accessible
grievance redressal & feedback system

Assurance in BRSR
Standard on Sustainability Assurance Engagement (SSAE) 3000 - Assurance Engagement on
Sustainability Info - providing reasonable or limited assurance
SSAE 3410, Assurance Engagements on Greenhouse Gas Statements

Intended users of SSAE 3000 -

• Assurance providers providing assurance on sustainability info
• Entities seeking to engage professional auditor
• Regulators, investors & other users of Sustainability Reporting data

Effective date of application of SSAE 3000 is -

• Voluntary basis for period ending on 31st March 2023
• Mandatory basis for period ending on/after 31st March 2024

Role of Auditor – Consideration of Climate related Risks in Audit of FS

• Role of auditor is to obtain reasonable assurance whether FS are free from MM due to
fraud/error
• While understanding entity, he shall consider climate risks & how they are relevant to audits
• Many investors are seeking info from auditor’s reports about how climate-related risks were
addressed in audit. With this increased focus on climate change, auditor may face increasing
pressure for transparency about climate matters in auditor’s reports
• Auditor’s report provides info about auditor’s responsibilities & understanding of matters of most
significance in audit
• In some circumstances, it may include EOM para to draw attention to disclosures having
fundamental importance to users’ understanding of FS
• Auditor shall determine whether entity has appropriately disclosed relevant climate-related info
in FS as per AFRF
• Auditor shall also read other info for consistency with info disclosed in FS & info publicly
communicated to stakeholders outside FS as per SA 720

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