Out of the box: use your influence A&R Magazine Nov Dec 21

 

Q: How can I help my team/function/organisation to be more sustainable?

A: Little steps, big steps, giant leaps – they all make a difference. Participants at COP26 are discussing the high-level issues, but whatever agreements they reach will take time to filter down to corporate and personal level in the form of official targets and regulations.

However, we already know the direction of travel, so there’s no point in delaying setting off just because we don’t yet know our exact destination. Big changes are needed and they need to start now. Some of the largest ones won’t be possible until organisations pave the way with the smaller things – so get started.

We often talk about internal audit’s unique holistic view of the business. This also gives it unique access to multiple departments, global locations, managers and sites. Internal auditors talk to people across the organisation and see what happens on the ground as well as scanning for potential and increasing risks originating outside the walls.

This makes internal auditors real trusted advisers. Every audit and every conversation can be an opportunity to consider sustainability and ask: Could this be done better, with less waste or more bio-diversity? Could we save energy, cut emissions or reduce water consumption? Could the cost of investing in more sustainable technology be offset by reduced risk, lower operating costs or positive customer relations? What can we gain by doing something now, rather than waiting till we are forced to do it by the government or competitive pressure? What are we planning to do about TCFD reporting – is internal audit planning to be involved in providing assurance over the accuracy, completeness and timeliness of the reporting?

When it comes to influencing, the opportunities from change may make a stronger case than the risks. Falling behind more innovative competitors is a business risk that can be hard to quantify – until it’s already happened. And failing to be innovative (either as an internal audit team, or as a business) can cause long-term reputational damage. Forging new relationships with potential allies or collaborators may not give a tangible return immediately, but could put your organisation in a far stronger position if you need to branch into a new business sector or source more sustainable energy or products in future.

All internal audit departments need to be looking beyond their own walls to assess macro risks, and climate change is more macro than most. The proverbial butterfly fluttering its wings in China or South America may already be sending drought, heatwaves, flooding and other natural disasters in your direction – not to mention all the consequent economic, operational and supply chain issues.

No internal audit team can track all the potential risks from this global phenomenon, but all can do what they’re best at; asking questions, fulfilling our trusted adviser role, observing real actions, planning scenarios and identifying data and being assurance providers. They need to tell management and the audit committee what’s really going on, highlight problems that need solutions and, sometimes, suggest solutions for problems management may not yet realise exist.

If every member of every internal audit team used every audit and every piece of assurance work and every conversation to ask “Is this sustainable?” and “How could it be more sustainable?” what results could they achieve? Whether it leads to multiple small steps or a few big leaps, they will at least be going in the right direction. 

 

This article was published in November 2021.