Auditing for sustainability and accountability: A guide for internal auditors

Environmental, Social, and Governance (ESG) issues are no longer optional—they are integral to business resilience, regulatory compliance, and stakeholder trust. For internal auditors, sustainability audits present a unique opportunity to strengthen accountability, mitigate emerging risks, and provide assurance that goes beyond financial performance. Done well, this enables organizations to align sustainability commitments with business value.

• ESG: A brief history
• What are ESG audits and why they matter
• Key areas of ESG auditing
• ESG reporting frameworks
• Environmental audits: measuring sustainability
• Social audits: building an ethical and inclusive workplace
• Governance audits: strengthening ethical leadership
• A practical ESG audit checklist
  • Pre-audit preparation
  • Environmental audit steps
  • Social audit steps
  • Governance audit steps
• Best practices for ESG audits
• Technology’s role in ESG auditing
• Conclusion

Environmental audits: measuring sustainability

Internal auditors assess how effectively organizations manage environmental risks and opportunities, focusing on:

• Carbon emissions measurement and reporting.
• Waste, energy and resource management efficiency.
• Climate-related risk assessment and resilience planning.
• Biodiversity impact of operations for the organization and its stakeholders.

Social audits: building an ethical and inclusive workplace

Audits in this area provide assurance over policies and practices that impact people, such as:

• Diversity, Equity, and Inclusion (DEI) performance.
• Employee health, safety, and well-being.
• Labor practices and human rights protections.

Governance audits: strengthening ethical leadership

Governance audits ensure organizations act with integrity and accountability. Key focus areas include:

• Ethics and anti-corruption programs.
• Board structure and composition.
• Cybersecurity, Data Privacy & System Integrity.

A practical ESG audit checklist

A practical audit checklist provides internal auditors with a structured, consistent approach to evaluating key risks and controls. It ensures that critical areas—such as environmental impact, social responsibility, and governance practices—are not overlooked and are assessed against clear criteria that have been established by the organization. Following a well-designed checklist will ultimately provide greater audit efficiency, while at the same time supporting compliance with evolving standards and assisting organizations to demonstrate accountability and transparency to stakeholders.

The following is a suggested checklist when preparing for each of the individual ESG audits:

Pre-audit preparation

• Define audit scope and ESG objectives.
• Identify stakeholders and reporting requirements.
• Map and prioritize ESG risks.
• Review governance structure for ESG oversight (e.g., sustainability committee, board responsibilities).
• Confirm data availability, quality, and assurance readiness for ESG indicators.

Environmental audit steps

• Verify accuracy of greenhouse gas reporting.
• Assess waste reduction and resource efficiency initiatives.
• Review climate risk preparedness.
• Evaluate compliance with environmental regulations and permits.
• Assess supplier environmental performance (e.g., sustainable sourcing, life-cycle impact).

Social audit steps

• Evaluate DEI policies and workforce representation.
• Confirm compliance with occupational health and safety standards.
• Review employee well-being and human rights protections.
• Assess community engagement, social impact programs, and stakeholder feedback mechanisms.
• Evaluate supply-chain labor practices, grievance mechanisms, and modern anti-slavery compliance (child labor, unsafe working conditions).

Governance audit steps

• Assess ethics policy enforcement and whistleblower mechanisms.
• Validate completeness of ESG disclosures.
• Evaluate board oversight of ESG risk management.
• Review board composition, diversity, independence, and ESG competency.
• Examine executive remuneration alignment with ESG or sustainability KPIs.
• Assess internal control and assurance processes for ESG data (e.g., third-party verification, internal audit review).
• Evaluate compliance with anti-corruption, data privacy, and cybersecurity regulations.

Best practices for ESG audits

Utilizing a best practice for auditing sustainability provides a consistent framework for evaluating complex and evolving areas. As a result, these practices help internal auditors ensure that assessments are thorough, objective, and aligned with regulatory expectations and stakeholder demands. Just as important, these best practices also promote transparency, improve risk management, and support continuous improvement by identifying gaps and opportunities. By strengthening the credibility and impact of the individual audit findings, these best practices help organizations build trust and drive meaningful change and may often include the following:

• Maintain complete audit trails: Document findings to support transparency and accountability.
• Leverage independent assurance: Collaborate with third-party assurance providers to enhance the credibility of the organization’s ESG disclosures.
• Embed ESG into the audit universe: Treat ESG risks as part of the overall risk assessment and planning process, supported by risk mapping features.
• Enable continuous monitoring: Track ESG metrics in real time using integrated solutions which helps anticipate risks and improve responsiveness.
• Establish clear ESG governance linkages: Ensure that ESG audit findings are escalated to governance bodies (e.g., the Audit Committee or Sustainability Committee) and reflected in board-level reporting.
• Apply recognized frameworks and standards: Align audit procedures with global standards such as the IIA’s ESG Auditing Guide, GRI, TCFD, or ISSB, ensuring consistency and comparability across reporting cycles.
• Enhance data integrity and assurance readiness: Evaluate the reliability of ESG data sources, including controls over data collection, aggregation, and system interfaces—especially when preparing for external assurance or CSRD compliance.
• Foster cross-functional collaboration: Engage key stakeholders across finance, operations, HR, sustainability, and compliance to ensure a holistic perspective and shared accountability for ESG outcomes.
• Prioritize continuous learning and auditor upskilling: Build ESG literacy within the internal audit team through ongoing training on sustainability standards, reporting trends, and regulatory developments.

Technology’s role in ESG auditing

Modern audit management systems simplify ESG audits by centralizing data, automating reporting, and providing real-time visibility. Advanced tools such as data analytics, automation software, and AI-driven risk assessment systems help auditors process large volumes of ESG-related data, identify patterns, and flag potential issues more effectively.

Technology has also proven to supports real-time monitoring, improve traceability, and facilitate standardized reporting, making it easier to align audits with regulatory requirements and stakeholder expectations. Ultimately, technology’s role in ESG auditing empowers internal auditors to deliver deeper insights and drive more informed decision-making with streamlined processes, live reporting to the audit committee and board, and accommodating for a more centralized data record to ensure greater consistency and transparency.

Conclusion

ESG audits are no longer just a compliance exercise—they are a driver of trust, resilience, and competitive advantage. With TeamMate+ and TeamMate+ ESG, internal auditors gain the tools to efficiently manage ESG risks, ensure reliable disclosures, and provide the assurance organizations need to navigate evolving sustainability expectations. When incorporating the correct technology into their workflow, internal auditors can spend less time on administrative tasks and more time delivering insights that shape organizational strategy.