Ep. 224: Unraveling ESG: Understanding Environmental, Social, and Governance Factors in Business – Part 1

As highlighted in the recent COSO publication on Internal
Controls over Sustainability Reporting, good governance and
systems for sustainable business activities and ESG reporting
require attention to potential risks around fraud and
greenwashing.  Reflecting Grant Thornton’s recent report on
control activities related to these risks, join us as we take a
dive deep into the world of Environmental, Social, and Governance
(ESG) in business with our latest episode of the 'Count Me In'
podcast. Hosted by a panel of experts, which includes Catie
Serex, Douglas Hileman and Dan Mosher, our podcast uncovers the
truth behind ESG, its importance in today's business world, the
challenges it presents, and importantly, its potential role in
fraudulent activities. Tune in for a fascinating conversation on
ESG reporting, corporate purpose, sustainability, and the latest
trends affecting investors, employees, and stakeholders alike.
Don't miss this chance to stay informed and ahead of the curve in
the ever-evolving world of business.


Connect with our speakers:
Catie: https://www.linkedin.com/in/ctserex/
Dan: https://www.linkedin.com/in/dan-mosher-8552519/
Doug:
https://www.linkedin.com/in/douglas-hileman-fsa-crma-cpea-p-e-6abbb71/


Download the reports mentioned into today's
podcast:
Achieving Effective Internal Control Over Sustainability
Reporting
Managing Fraud Risks in an Evolving ESG Environment

Full Episode Transcript:
Adam:            Hello,
and welcome back to another enlightening episode of Count Me In.
I'm your host, Adam Larson, and today we're diving deep into the
complexities of Environmental, Social, and Governance, ESG, with
a distinguished panel of experts. We're joined by Douglas
Hileman, an experienced sustainability consultant, with over
three decades of experience in environmental management systems,
and internal controls. 


 


Alongside him, we have Dan Mosher, a seasoned professional who
excels in helping businesses navigate the complexities of
sustainability and environmental risks. Last but not least, we
welcome Catie Serex. A leader in environmental, health, and
safety, auditing and management who assists businesses in
integrating sustainable and socially responsible practices. 


 


Today's discussion will delve into the importance of ESG, the
challenges businesses face in managing ESG data, and the
potential risk of fraud in ESG reporting. Here we go, let's
listen in together.


 


[00:01:00]       < Music
>


 


Doug:           
  And one of the things that we might kick off is
with a very basic question of what is ESG? Dan, when people ask
you this, how do you answer?


 


Dan:             
  Well, it really is a big umbrella, and I'll ask
for some help from Catie in this regard. But ESG stands for
Environmental, Social, and Governance. And, so, lots of things
under that environmental area. Everything from waste management
and air quality, climate change. From a social perspective, it
could be your human capital management, health and safety
matters. Governance, I think of anticorruption, data risks, and
the like. So it really is a broad title when we say ESG. Catie,
do you have some things you'd like to add to that comment?


 


Catie:           
  Yes, Dan, you definitely covered the gamut as far
as some of the phrasings and the terminology, and really the
topics that fall under that ESG umbrella. What I would want to
add is that ESG is certainly one of the buzziest words in
business today. But you might not know that ESG is, very simply,
the newest iteration of concepts you've likely known for a long
time. It's been previously known as corporate purpose,
sustainability, even philanthropy. 


 


But what differentiates ESG from these previous versions is that
it now represents the closest alignment, to date, of business
operations, so think about your tangible assets. To those
intangible elements of business that drive value. And, in this
case, I'm referring to things like customer loyalty, labor
environments, community engagement support. And because of this
connection, ESG is moving from a nice-to-have to a need-to-have
for companies, but also their investors, their customers, and
other key stakeholders like their employees.


 


Doug:           
  I also think of ESG as a convenient taxonomy for
all things non-financial. Many people have published those
pillars or the word clouds that's in the ACFE report, and what
topic goes where. For financial reporting, we know where sales
goes and we know where EBITDA goes. We know where those are in a
format and how to put the data and information together for
clarity 


and reporting. For all things non-financial, it's just such a
sprawling array of topics that ESG serves for one reason, in one
way, as just simply a taxonomy. And there are some issues, such
as climate change, like Dan mentioned, that really transcend more
than one category, if you will. But for purposes of just where do
you find it, and how do you manage it, and it can just serve as a
taxonomy. Catie, to your point, on how to organize some
processes, some controls, some recordings to understand what the
organization is doing.


 


Dan:             
  And I'd be interested in hearing your thoughts on
the various channels in which this information is being put out
there in the public. Catie, maybe you have some thoughts around
the wide scope of that.


 


Catie:           
  Yes, so in terms of the reporting side of things
and getting to the nuts and bolts of what, I'm sure our listeners
are interested in, in terms of, what am I on the hook for? There
are a lot of reporting frameworks out there that are guiding
folks. And I know that that's been a point of confusion for
people is understanding, there are all these different acronyms
out there. That I can report to like SASB, or the Global
Reporting Initiative, GRI, Task Force for Climate-Related
Financial Disclosures or TCFD. There are a lot of frameworks out
there, but the field is narrowing. 


 


So some of the communication that we've been seeing from these
wider umbrella frameworks, are that they are working together to
consolidate. To make things a little bit more straightforward,
and to make things a little bit more uniform across the reporting
landscape. But that's currently in progress, and this is just a
result of this being not in nascent stages, but still in its
growth period, and really honing down what are the things that
shareholders, regulators, and such need to see when it comes to
these ESG disclosures.


 


Dan:...