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Sustainability in your organization: Expanding the role of internal audit

Part II of a two-part series

RISK BULLETIN  | 

With companies facing several pressing operational and regulatory concerns, sustainability is often relegated to the back seat. Unfortunately, without proper attention, in time, sustainability will become a more pressing and costly matter to deal with. Internal audit can play a significant role in helping create a more proactive, sustainable organization through the course of its interactions with the organization.

As we discussed in the March issue of Risk Bulletin, driving sustainability within the organization is a significant challenge. In most cases, a culture change is necessary requiring a long-term initiative that may not yield measurable results overnight. However, with the expansion of the internal audit role and empowering the function to enable change, sustainability may be more readily and cost effectively achieved. Through these sustainability related activities, internal audit can enhance its position and become more influential within the organization by assessing and affecting cultural change. Change that is often difficult to drive and can be the CEO's "Holy Grail."

Internal audit can help diagnose an organization's level of sustainability, with diagnostic tools such as surveys and questionnaires. These can be readily deployed during the course of an audit with minimal incremental effort. Surveys should be designed to obtain and summarize results by region and department. Answers may be compiled in numerical form (for example, on a 1-5 scale) to yield easy to understand conclusions and a clear position on sustainability to present to executives. The C-suite does not have the perspective to gain the same view of sustainability as internal audit can provide. Therefore, the department's insights and observations are critical to developing and measuring the success of organizational initiatives such as sustainability.

Several different questions can be asked with a questionnaire or survey depending on the business and goals. Reporting standards break sustainability down into a variety of groupings such as economic, environmental, human resources and political.

For example, a large multinational organization with global operations and a decentralized model could ask the following questions to help gauge its current sustainability culture:

  • Provide a list of sustainability programs currently in place. Are they monitored?
  • Are sustainability projects or incentives published throughout the organization?
  • Can you provide a list of any sustainability driven incentives for employees?
  • Does the organization have a sustainability champion?
  • Is sustainability built into significant projects and business decision making?
  • Is sustainability part of your corporate mission statement?
  • Can you articulate the top three sustainability risks to the organization?
  • How can sustainability initiatives reduce costs?

The individual and consolidated results of these questionnaires can provide valuable insight as to the organization's sustainability culture as well as identify areas of immediate opportunity and tangible return. Sustainability becomes more attractive when the benefits are more pronounced and exceed their costs. Once your organization focuses on sustainability, that initiative can become a competitive edge. A recent study showed that 82 percent of consumer respondents are more likely to purchase a product that clearly demonstrates corporate sustainability initiatives.1 In addition, 40 percent stated they would not purchase a product or services if sustainability results are not communicated.2 Consumer demands are changing, and sustainable organizations have the upper hand over nonsustainable counterparts.  

For internal audit, sustainability is a worthwhile endeavor, as it is a vehicle to increase the department's presence with important information regarding the organization's culture and direction most of which can be obtained with a few well thought out questions and a quantitative measurement of these.

The financial impact of sustainability also cannot be ignored, and increased revenue or decreased costs is the reason many businesses strive to become sustainable. Sustainability can be profitable and also yield many intangible benefits, and the winning organizations in the long run will be those that get in front of the issue, determine their culture and implement proactive initiatives. Regardless of the reasoning behind it, the financial and operational benefits that come with sustainability are numerous, and internal audit can play a significant role.

1 Consumers Demand More Than CSR 'Purpose'," Cone Communications, accessed May 1, 2014, http://www.conecomm.com/2012corporatesocialreturntrendtracker.
2 "Consumers Demand More Than CSR "Purpose"