An annual sustainability audit under frameworks like the Science-Based Targets initiative (SBTi), Global Reporting Initiative (GRI), and Carbon Disclosure Project (CDP) involves reviewing and verifying an organization’s environmental, social, and governance (ESG) performance. Each framework has distinct focuses and methodologies, which are often integrated into a comprehensive sustainability audit.
- Science-Based Targets initiative (SBTi)
The SBTi is focused on helping companies set greenhouse gas (GHG) reduction targets in line with climate science to limit global warming to well below 2°C, preferably 1.5°C, above pre-industrial levels.
Key Elements of an SBTi Audit:
- Target Setting and Validation: Verification that the company’s targets are consistent with the SBTi criteria and aligned with the latest climate science.
- Progress Tracking: Evaluating the organization’s progress against its science-based targets, including reductions in Scope 1, 2, and 3 emissions.
- Methodology Review: Ensuring that the methods used to calculate emissions and reductions are consistent with SBTi guidelines.
- Documentation and Reporting: Confirming that all relevant data and assumptions are well-documented and reported transparently.
- Global Reporting Initiative (GRI)
The GRI provides a comprehensive set of standards for sustainability reporting, covering a wide range of environmental, social, and governance (ESG) topics.
Key Elements of a GRI Audit:
- Materiality Assessment: Reviewing how the company determines which sustainability issues are material (i.e., most important) to their business and stakeholders.
- Data Accuracy and Completeness: Verifying the accuracy and completeness of the data reported on various GRI indicators, such as emissions, waste, water use, labor practices, and human rights.
- Disclosure Practices: Ensuring that the company follows GRI’s reporting principles (e.g., stakeholder inclusiveness, sustainability context, completeness, balance) and discloses information in line with GRI standards.
- Consistency and Comparability: Checking that the sustainability report allows for comparability over time and with other organizations, as recommended by GRI.
- Carbon Disclosure Project (CDP)
The CDP focuses on environmental transparency, encouraging companies to disclose their impacts on climate change, water security, and deforestation.
Key Elements of a CDP Audit:
- Climate Disclosure: Verifying the accuracy of GHG emissions data, climate risks and opportunities, and the organization’s climate strategy as disclosed in the CDP questionnaire.
- Water and Deforestation: Reviewing disclosures related to water use and risks, as well as deforestation and supply chain impacts, to ensure they are comprehensive and accurate.
- Scoring and Benchmarking: Ensuring that the data submitted aligns with CDP’s scoring methodology, which assesses the completeness, transparency, and actions taken by the company.
- Improvement Plans: Evaluating the effectiveness of any action plans the company has in place to improve its environmental performance and CDP scores.
Audit Process
The sustainability audit process under these frameworks generally involves several steps:
- Preparation and Planning:
- Understanding the scope and objectives of the audit.
- Reviewing previous reports, targets, and disclosures.
- Data Collection and Verification:
- Gathering all relevant data related to sustainability performance.
- Verifying the accuracy, reliability, and completeness of the data through sampling, site visits, and interviews.
- Gap Analysis:
- Identifying any gaps or areas where the company’s practices fall short of the requirements or best practices outlined by SBTi, GRI, and CDP.
- Reporting:
- Compiling the findings into an audit report, highlighting strengths, weaknesses, and areas for improvement.
Providing recommendations for better alignment with SBTi, GRI, and CDP standards.