Assurance of non-financial information is gaining prominence due to several factors. Stakeholders, including investors and consumers, are increasingly interested in a company's environmental, social, and governance (ESG) practices, risk management, and overall transparency. Assurance provides an independent assessment of these aspects, enhancing the credibility of a company's claims and fostering trust with stakeholders. Moreover, the assurance process aids in identifying potential risks and enables companies to implement corrective measures, improving their risk management capabilities.

  In India, regulatory bodies like the Securities and Exchange Board of India (SEBI) may mandate assurance for specific types of reports submitted by listed companies to ensure the accuracy and reliability of the reported information. Chartered Accountants (CAs) and other qualified professionals working with accredited assurance bodies are authorized to provide assurance services.

 International Standards on Assurance Engagements (ISAEs), specifically ISAE 3000 and ISAE 3410, serve as frameworks for conducting assurance engagements. ISAE 3000 outlines general principles and requirements for engagements covering non-financial information like sustainability and compliance reports, while ISAE 3410 focuses specifically on greenhouse gas (GHG) statement assurance.

 Chartered Accountant (CA) firms play a crucial role in providing assurance services due to their expertise in accounting, auditing, and risk management. They conduct assurance engagements for various non-financial information types, ensuring their practices align with ISAE standards. By maintaining independence and adhering to ethical codes, CA firms add credibility to a company's non-financial information through their assurance reports.

Environment and Social Due Diligence Services

We offer  ESDD services to our clients. Our ESDD services cover an in-depth study of the Impacts your business has on the Environment and Society, Our structured questionnaire and interaction with stakeholders will give an insight into the positive and negative impacts along with the compliance level.

 Key Components of ESDD:

• Environmental: This aspect examines potential environmental risks and liabilities, such as:

  • Pollution: Air, water, and soil contamination

  • Waste management: Hazardous waste disposal, waste generation, and recycling practices

  • Resource depletion: Water use, energy consumption, and raw material usage

  • Climate change: Greenhouse gas emissions, carbon footprint, and climate change vulnerability

  • Biodiversity: Impacts on ecosystems, habitats, and protected species

• Social: This component assesses the potential social impacts and risks, including:

  • Labor standards: Fair wages, working conditions, and labor rights

  • Community health and safety: Impacts on local communities, health risks, and safety protocols

  • Human rights: Respect for human rights, including those of indigenous peoples

  • Land acquisition and resettlement: Impacts on communities displaced by projects

  • Cultural heritage: Protection of cultural sites and artifacts

Why is ESDD Important?

• Risk Management: ESDD helps identify potential environmental and social risks that could negatively impact a company's reputation, financial performance, or legal standing.

• Compliance: It ensures compliance with relevant environmental and social regulations and international standards.

• Investment Decision-Making: ESDD provides valuable information for making informed investment decisions, helping investors avoid projects with unacceptable environmental or social impacts.

• Stakeholder Engagement: It facilitates engagement with local communities and other stakeholders, building trust and addressing potential concerns.

• Sustainability: ESDD promotes sustainable development by encouraging responsible environmental and social practices.

Who Conducts ESDD?

• Investors: To assess the risks and impacts of their investments.

• Companies: To manage their own environmental and social performance and comply with regulations.

• Lenders: To assess the risks associated with financing projects.

• Governments: To ensure that development projects are environmentally and socially sustainable.

ESDD Frameworks and Standards:

 National, Several international frameworks and standards guide ESDD, including:

• Equator Principles: A risk management framework for financial institutions.

• IFC Performance Standards: Environmental and social sustainability standards for private sector projects.

• OECD Guidelines for Multinational Enterprises: Recommendations for responsible business conduct.

• Indian Governments NGRBC guidelines: National Guidelines on Responsible Business Conduct

In conclusion, ESDD is a crucial process for managing environmental and social risks, promoting sustainable development, and ensuring responsible business practices. By identifying and mitigating potential impacts, businesses and investors can contribute to a more equitable and sustainable future.

EIA (Environmental Impact Assessment) is a proactive tool used to assess and mitigate the potential environmental impacts of future projects, while ESDD is a reactive tool used to assess and manage the existing environmental and social risks of current operations or investments.