Environmental and Social Audit

• Environmental and Social Audits are designed to ascertain whether the organization is complying with codes of best practice or internal guidelines, and is fulfilling the wider requirements of being a good corporate citize
• It is a Systematic, documented, periodic and objective evaluation of how well an entity, its management and equipment are performing, with the aim of helping to safeguard the environment by facilitating management control of environmental practices and assessing compliance and entity policies and external regulations
• It is also used for auditing the truth and fairness of an environmental report rather than the organization itself, the same is true of social auditing.

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Stages in an Environmental Audit 

Environmental auditing contains three stages.

1. The first stage is agreeing and establishing the metrics involved and deciding on what environmental measures will be included in the audit. This selection is important because it will determine what will be measured against, how costly the audit will be and how likely it is that the company will be criticised for ‘window dressing’ or ‘greenwashing’. 

2. The second stage is measuring actual performance against the metrics set in the first stage. The means of measurement will usually depend upon the metric being measured. Whilst many items will be capable of numerical and/or financial measurement (such as energy consumption or waste production), others, such as public perception of employee environmental awareness, will be less so. Given the board’s stated aim of providing a robust audit and its need to demonstrate compliance, this stage is clearly of great importance. 

3. The third stage is reporting the levels of compliance or variances. The issue here is how to report the information and how widely to distribute the report. The board’s stated aim is to provide as much information as possible ‘in the interests of transparency’. This would tend to signal the publication of a public document (rather than just a report for the board) although there will be issues on how to produce the report and at what level to structure it. The information demands of local communities and investors may well differ in their appetite for detail and the items being disclosed.