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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Sustainability Audit, ESG Rating and Emerging Mandates from Government and Regulators

Meridian Textiles Ltd, a listed company, engages an independent firm to examine its sustainability disclosures and issue a conclusion on whether they are fairly presented against stated criteria. The board's sustainability committee asks what this exercise is best called.

The exercise is sustainability assurance. An independent practitioner examines reported sustainability information against stated criteria and issues a conclusion on its fair presentation, which increases stakeholder confidence. It differs from cost audits, credit ratings or internal budget reviews, which have different subjects and purposes.

  1. ASustainability assuranceCorrect
  2. BInternal budgeting review
  3. CStatutory cost audit
  4. DCredit rating assessment

Explanation

An independent examination of sustainability disclosures against stated criteria, ending in a conclusion, is sustainability assurance. A cost audit examines cost records, a credit rating assesses repayment capacity, and budgeting review is an internal planning exercise, so none of these fit.

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