How Internal Audit is critical in supporting an ESG agenda

How Internal Audit is critical in supporting an ESG agenda

With pressure from investors and consumers rising, organisations are continuing to prioritise their Environmental, Social and Governance (ESG) agenda.  This has naturally had an impact on all areas of corporate governance, and internal audit is no exception. Indeed, internal audit functions now have a critical role to play in supporting ESG efforts.


As one of only a few functions with oversight of their entire organisation, internal auditors are uniquely positioned to offer valuable insights to leadership teams. They can make connections between risks and opportunities which other departments would be unaware of, particularly in global businesses where auditors can help implement best practice from one team to another.


Internal audit will also have a key part to play in the following areas:


Competitor Benchmarking


A broad review of the ESG risks your organisation may face is the first step in any ESG strategy.  It usually involves a degree of competitor analysis too, to see how other firms are approaching their ESG strategies.


Creating an assurance roadmap


Following a risk assessment, the next step is to create an assurance delivery roadmap. Many organisations appreciate input from auditors, as it can be a challenging task. Typically, this roadmap will incorporate supply chain due diligence, ESG data, ESG reporting and ESG management information.


Ensure robust ESG risk management


Internal audit teams can examine a company’s current frameworks and standards to ensure they are fully compliant with local regulations and fit for purpose.  They can also assess the effectiveness of design and operation of controls, to reduce ESG risks and identify any significant deficiencies or gaps.


Supporting change


Internal auditors keep themselves updated with the ever-changing regulations and the associated risks which often necessitate a change in a business’ focus. This is especially pertinent for ESG, as the landscape is constantly changing and regulations vary wildly according to region, country – and even within countries, as is the case in the U.S.


Representing the Board


Internal audit functions represent their organisation’s Board when working with ESG teams on strategy. As such, they will ask questions, such as:


  • ·      To what extent will executive-level leaders be involved in the ESG risks and opportunities, and how often will risks be assessed?
  • ·      How ready is the company for upcoming legislative and regulatory changes?
  • ·      What are the current public commitments to ESG and are the right controls around the data in place, to support these external goals?

Skills and experience

Delivering effectively on ESG aspects of internal audit can be a challenge if there are skills gaps. Some organisations may look to bring in some temporary support from an external audit firm, but with ESG guaranteed to be a mainstay of internal audit roadmaps on an ongoing basis, we are seeing a rising interest in hiring internal auditors with ESG experience as a permanent, in-house hire. 

The key experience which employers are seeking right now is around ESG regulation, reporting and data.

At Leonid, we specialise in corporate governance recruitment and we have a strong candidate network of internal auditors who have extensive ESG experience.

We also offer advice to organisations on how to optimise their team structure.

If you have a particular interest in ESG, you may also like to download our Global Guide to ESG Recruitment which provides not only salary and hiring data but also an overview of the key challenges facing ESG teams around the world.


Adam Bond is our lead consultant for both Audit and ESG. Please do reach out to him if you’d like any more information!