Legal Operations » How COSO Can Help Legal Ops With Sustainability Reporting

How COSO Can Help Legal Ops With Sustainability Reporting

How COSO Can Help Legal Ops With Sustainability Reporting

August 25, 2023

Last week’s TLO post on why ESG disclosures belong in the Legal Department pointed out that monitoring ESG-related disclosures and ensuring that the company has the necessary internal controls and procedures in place should be a focus for both in-house counsel and Legal Operations. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has recently issued a report describing how its Internal Control-Integrated Framework can apply to sustainable business activities and information. This report can serve as a resource for providing complete and accurate sourcing, measurement, compilation, review and disclosure of ESG-related information.

The framework consists of five components encompassing 17 principles that are interrelated with the operational, reporting and compliance objectives of an organization: (1) a control environment, which supports effective internal control over sustainability reporting (ICSR); (2) a comprehensive risk assessment for ESG information that includes sustainable business objective setting, cross-functional collaboration, management involvement, and assessment of incentives and pressures for fraud; (3) control activities including tailored, documented and tested business processes, and general information technology; (4) information and communication systems and data aggregation methods designed to effectively collect, measure and present ESG-related information that supports effective ICSR; and (5) monitoring activities that require continually assessing the effectiveness of governance structures and control activities to identify and remediate deficiencies.

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