One major French investor is making an interesting attempt at ensuring financial auditors don’t give sustainability data and reporting support short shrift. Here is part of what Responsible Investor said:
“France’s public pension fund ERAFP has updated its voting policy to recommend voting against the appointment or renewal of an auditor in the event of ‘breaches of shareholder interests or failed diligence’ on sustainability data and reporting. The public sector pension provider counts ‘failed diligence’ as delays to auditing conclusions, insufficient details, or incomplete information. It added that this is relevant in the assessment of ESG and climate data in the context of the Corporate Sustainability Reporting Directive (CSRD)… the general recommendation to vote against an auditor in certain circumstances already existed in the pension fund’s guidelines, but the point relating to the assessment of ESG data was added this year.”
This should get the attention of audit partners for companies that are ERAFP holdings. I’m not sure this initiative will make its way across the Atlantic and impact US-based auditors and companies (in the context of US sustainability/ESG/climate disclosures). But you never know, especially with the increase in financial statement audit quality concerns in the US, as Advisory Board member Dan Goelzer recently reported.
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