Environmental audits must for corporates to ensure sustainability: Opinion

By Hemant Sethi, Country Head, British Safety Council, India

Global warming has become more perceptible than ever before. Weather changes have become noticeable and are affecting cropping patterns and yields, the impact of which is being recognized by economies all over the world. Given this scenario, it was encouraging then to see the Indian government announce goals to align to net-zero at the COP26 summit on sustainability that concluded in Glasgow, last year. However, a net-zero ambition for a country cannot be fulfilled without businesses playing a participatory role in the process of achieving net-zero goals.

The Government on its part brought in the new environment, social and governance (ESG) reporting provision for the top 1000 companies in India, by market cap basis. To enable compliance, businesses need to function with full environmental responsibility.
While it would be good to get more companies to embrace sustainability goals to reduce their carbon footprints, many companies fall short of meeting global standards that allow the public and investors to evaluate how sustainable the company may be.

What companies need is a robust set of sustainability-related reporting standards to enable investment. This is where environmental sustainability (ES) audits may prove beneficial. Let us now look at how an ES audit can help overcome challenges in ESG reporting. Anenvironmental sustainability audit can provide an unbiased third-party validation for an organisation’s current policies, processes, and practices.
Companies can use the audit to examine in-depth their entire environmental management system and associated processes. This includes all sustainability policies, processes, and practices. Sustainability audits can help businesses assess their capacity to sustain in the future while preparing them to take the requisite steps to adapt to changes. 
A key issue faced by Indian companies in sustainability reporting is the lack of independent verification and assurance of reports. It is understood that only a few ESG reports are independently assured. 

Independent verification goes a long way in providing comfort to stakeholders, management, and the board in mitigating the risks posed by sustainability issues.   Another challenge is that the performance of Indian corporate reporting is not up to the mark when compared with companies from European Union, China, and Japan. Most of the time Indian companies fail to come out with innovative approaches to addressing sustainable issues.  
What are the key benefits of an ES Audit? 
An ES audit can help companies put in a structured route toward continual improvement and best practice standards. They can use the audit to put in processes that help monitor current and changing environmental legislation. Companies can expect improved environmental management systems and proper resource allocation. ES Audits can help organisations to get insights on developments within the organisation while checking systems and procedures.
Environmental auditing can unveil weaknesses of an organisation’s strategy, therefore reducing the risk of unexpected events. An environmental sustainability audit can be undertaken by any organisation, irrespective of its size.

Implementation of ES in businesses can be a challenge for companies undertaking such an exercise for the first time. 
For companies planning their first steps in implementing environmental management, the audit can be used as a road map for both short- and long-term plans for environmental performance improvement. It may be noted that successful implementation, will require participation at all levels within the organization. 
What does the ES audit involve? 
Typically, an ES audit involves an on-site review of relevant documentation followed by interviews and discussions with relevant stakeholders (including top management). It helps to benchmark and validate ongoing initiatives in sustainability. 

The assessment may be based on a host of areas including assessing ESG risks, planning control measures, allocating roles and responsibilities, implementing and maintaining controls, communication and training, monitoring effectiveness, and reviewing and revising arrangements. 

An independent environmental sustainability audit can help demonstrate environmental credentials to customers, supply chain, and other stakeholders. It will make companies more responsible, help utilise the resources efficiently and foster sustainable business growth.

Hemant Sethi, appointed as Country Manager India of the British Safety Council in September 2017. As the Country leader for the British Safety Council, Hemant played an integral part in managing the successful launch of the British Safety Council’s India operation. From 2014 to 2017, Hemant held the post of Head of Corporate Sales, India with British Airways, where over three years, he contributed towards substantially improving the airline’s commercial performance.