The analysis, Building Trust in Sustainability Reporting: The Urgent Need for Integrated Internal Control, highlights the increasing expectations of investors for high quality and reliable sustainability-related information driven by a number of new standards and requirements for mandatory sustainability-related disclosures.  Investors expect companies to produce reliable and connected financial and sustainability reporting and sustainability-related disclosures in order to allow them to make informed economic decisions based upon the information provided.

The analysis indicates that an integrated internal control environment for financial and sustainability reporting will enable companies to meet these investor demands and in turn will lead to increased confidence in the quality of sustainability information through integration into the mainstream reporting process.  IFAC comments:

Through an integrated control environment based on an integrated mindset, companies will achieve greater connectivity of functions, processes and systems leading to enhanced data quality to improve decision making on strategy, risk, opportunity management and governance-related matters.  This is the foundation for transitioning to a more sustainable business model and enhancing investor and stakeholder confidence in sustainability performance.

The analysis explains that an integrated internal control environment establishes robust data collection, processes and controls through:

• Effective governance
• Risk and materiality assessments
• Sustainability reporting policy and process development
• Robust data management and reporting systems
• Continuous improvement framework

The analysis provides guidance on how entities might go about addressing the challenges associated with collecting, processing and analysing sustainability information in the design of the internal control environment and also the role that the finance function and professional accountants will play.

The press release and the analysis are available on the IFAC website.