Auditors are playing a more prominent role helping investors rely on corporate ESG information for their investment decisions, according to a report issued Wednesday by the Center for Audit Quality, an independent organization working to enhance investor confidence and public trust in global capital markets.
"Auditors have long played a role in the reliability of traditional financial information, and they can do the same with ESG information," CAQ Executive Director Julie Bell Lindsay said in a statement.
The report, The Role of Auditors in Company-Prepared ESG Information: Present and Future, noted that ESG reporting has gotten even more attention from investors as they incorporate sustainability into investment decisions. That is particularly true as investors seek information on how public companies are responding to ESG issues related to COVID-19 such as employee health and work environments, CAQ said.
The report looks at the types of information captured by companies and the numerous reporting standards and frameworks, noting the lack of a single globally accepted system to help companies and investors compare ESG information.
The report offers board members key questions to consider when discussing ESG reporting with management and investors, including what the company has done to date and where it hopes to go.
Investors should consider how companies develop their ESG information and whether it is reliable, the CAQ report said.