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ESG Audits

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ESG Audits for actionable insights and reduced risk

Whether you would like to assess the ESG performance of your company, perform due diligence on business partners, underpin investment decisions or reduce the risk in your supply chain, DQS India has the expertise to achieve your goals. With a global team of ESG auditors, we facilitate transactions, help you mitigate risk and drive ESG improvement across the globe.

Actionable insights as audit output

Boots on the ground with local auditors

Identifying and mitigating ESG risks

Beyond compliance: driving ESG improvement

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What is an ESG audit?

ESG audits exist in many different types and for different use cases. In general, an ESG audit is a systematic evaluation of a company's performance and practices in relation to environmental, social, and governance factors. It assesses how well a company aligns with sustainability standards and evaluates its impact on various stakeholders, including employees, communities, customers, investors as well as our planet and its ecosystems. It also confirms the ESG-related risks an organization may be exposed to.

The purpose of an ESG audit is to provide an objective and comprehensive analysis of a company's ESG performance, policies, processes, and potentially its disclosures. It helps to identify areas where the company excels and areas that require improvement. The audit process typically involves collecting and analyzing relevant data, benchmarking against international standards, and providing recommendations for enhancing ESG practices.

At DQS, we believe that robust and credible audits typically require an on-site assessment, including a visual assessment of the company and its operations, as well as face to face interviews with management and workers.

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ESG audits to mitigate supply chain risks

Audits can play a crucial role in reducing Environmental, Social, and Governance (ESG) risks in the supply chain by providing a systematic and comprehensive assessment of the practices and performance of suppliers. DQS conducts tailor-made supplier audits, social compliance audits as well as audits in accordance with sector-specific standards and initiatives, such as Together for Sustainability, Responsible Business Alliance, RSCI and Sedex SMETA.

Here's how audits can help:

  • Identify non-compliance: Audits help identify any non-compliance with applicable Codes of Conduct, environmental regulations, labor laws, human rights standards, and other ESG-related requirements. By thoroughly examining suppliers' operations, processes, and documentation, audits can pinpoint areas of non-compliance that may pose risks to ESG factors.
  • Assess supplier practices: Audits allow organizations to evaluate suppliers' ESG practices and performance. This includes examining their environmental impact, such as resource consumption, waste management, emissions, and pollution control measures. Audits also assess social aspects, such as labor practices, health and safety protocols, employee welfare, and diversity and inclusion initiatives.
  • Encourage transparency: Audits promote transparency by requiring suppliers to provide accurate and comprehensive information about their ESG practices. This helps organizations gain visibility into their supply chains and ensures that suppliers are accountable for their actions and disclosures. Transparent reporting also allows stakeholders, including customers, investors, and regulators, to make informed decisions and hold suppliers accountable.
  • Establish benchmarks and standards: Audits help establish benchmarks and standards for suppliers' ESG performance. By setting clear expectations through audit criteria, organizations can communicate their requirements to suppliers and drive improvements in ESG practices. These benchmarks can be based on industry-specific standards, international guidelines, or the organization's own sustainability goals.
  • Drive continuous improvement: Audits serve as a tool for continuous improvement by identifying areas of weakness or non-compliance in the supply chain. The findings from audits can be used to develop corrective action plans and work collaboratively with suppliers to address identified risks and shortcomings. Regular audits create accountability and encourage suppliers to make ongoing improvements in their ESG performance.
  • Enhance risk management: Audits contribute to a robust risk management framework by proactively identifying ESG risks in the supply chain. By assessing suppliers' practices and performance, audits help organizations identify potential vulnerabilities, such as unethical labor practices, environmental violations, or poor governance. This enables organizations to take proactive measures to mitigate risks, protect their reputation, and ensure compliance with ESG requirements.

Overall, audits provide organizations with a structured approach to assess and mitigate ESG risks in the supply chain. By promoting transparency, accountability, and continuous improvement, audits contribute to more sustainable and responsible business practices.

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ESG Audits to verify ESG Disclosures and ESG Reports

ESG assurance is a type of audit to evaluate the accuracy, reliability, and completeness of a company's ESG data and disclosures. The purpose of ESG assurance is to provide stakeholders, such as investors, regulators, and the public, with confidence in the ESG information reported by a company. DQS India is an AA1000 licensed assurance provider for third-party assurance on sustainability reporting. In addition, we provide verification of corporate carbon footprints and other environmental data.

During the ESG assurance process, the assurance provider assesses the company's ESG policies, procedures, and practices to determine whether they align with established standards, guidelines, or frameworks such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), the European Sustainability Reporting Standards (ESRS) or Task Force on Climate-related Financial Disclosures (TCFD). The assurance provider also examines the company's data collection and reporting processes, verifies the accuracy of reported ESG metrics, and assesses the effectiveness of internal controls related to ESG information.

Once the assessment is complete, the assurance provider issues an assurance statement or report that provides an opinion on the reliability and accuracy of the company's ESG information. This statement helps stakeholders make informed decisions by providing them with an independent assessment of a company's ESG performance.

ESG assurance is becoming increasingly important as the demand for transparent and reliable ESG information grows. It helps companies enhance their credibility, manage risks, and build trust with stakeholders who are increasingly focused on sustainable and responsible business practices.

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ESG Audits as Due Diligence

ESG due diligence refers to the process of assessing and evaluating the environmental, social, and governance (ESG) risks and opportunities associated with a business partner, target company or asset. In a broader sense, due diligence audits can be conducted on business partners of all kinds, as an instrument to assess ESG-related risks and opportunities.

In many countries, legislation on human rights due diligence and environmental due diligence have been introduced or are the process of being introduced. ESG audits are a measure to ensure compliance with codes of conduct, human rights conventions and environmental standards.

ESG factors have gained significant importance in recent years as investors, regulators, and stakeholders increasingly recognize the impact of non-financial risks and opportunities on business performance and long-term sustainability. Integrating ESG considerations into due diligence helps you understand the potential risks, liabilities, and value drivers associated with the company's ESG performance.

By conducting ESG due diligence, companies can gain insights into the ESG performance of the business partner/asset and make informed decisions, taking into account both financial and non-financial factors. It also helps ensure alignment with ESG regulations, industry standards, and stakeholder expectations.

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ESG Certification

ESG certification is a process by which companies are evaluated and assessed based on their performance and commitment to sustainable and responsible business practices. ESG factors are used to evaluate a company's impact on the environment, its treatment of employees and communities, and the effectiveness of its corporate governance structure.

It's important to note that ESG certification is not a standardized process, and different organizations may have their own frameworks, methodologies, and criteria for evaluation. As ESG practices continue to gain importance in the business world, there is a growing number of initiatives, standards, and certifications available to assess a company's sustainability and social responsibility performance.

At DQS we do not believe that there is one single standard that can credibly cover all aspects of ESG across all industries and for all use cases. Rather, we believe that the standards organizations adhere to should be selected after careful consideration of multiple factors, including but not limited to, stakeholder expectations, material topics, type and severity of impacts, risk profile, industry sector, intended outcomes, etc. As such, the starting point for any ESG certification project should be a dialogue to understand these points.

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ESG Audit Process

Any project starts with a dialogue to understand your objectives and situation. Based on this, we can jointly define the most suitable audit approach for the expected outcomes.

DQS will assign a team of qualified auditors for your assessment. The audit criteria and method will be dependent on the specific type and purpose of the ESG audit.

ESG audit programs typically foresee the possibility to take corrective and preventative actions after the audit. The exact process and scope will depend on the nature of the audit program.

The audit report provides a detailed overview of the steps taken by the auditor team, as well as the findings, observations and non-compliances. In line with the audit objectives, it is compiled in such a way as to enable stakeholders to have a thorough understanding of the ESG performance of the auditee. For some ESG programs, a certificate is part of the process and enables certified organizations to demonstrate compliance with ESG standards.

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What is the cost of an ESG Audit in India?

The cost of an ESG audit is determined by various factors. These include, but are not limited to, the size of the company, the risk classification, the scope of the audit, the required level of assurance, the duration of the audit, and the expected documentation formats.

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Why DQS India is the perfect partner for ESG audits?

  • Worldwide network of experienced ESG auditors and staff
  • Trusted partner for credible and robust third-party assessments
  • Strong customer focus and high quality of service extending well beyond the assessment
  • Actionable insights to drive improvement and reduce risk
Carolin Nguyen

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