Deloitte’s commitments to people, the planet, and our Purpose are reflected throughout our organization’s strategy, operations, and stakeholder engagement. As it relates to auditors, generally accepted auditing standards require auditors to identify and assess the risks of material misstatement in the financial statements of the companies they audit, and to design and perform audit procedures responsive to those risks, including, when relevant, climate-related risks.
Specifically, within Deloitte’s Audit & Assurance (A&A) practice, Deloitte is committed to supporting net-zero ambitions by planning and performing financial statement audits with a focus on quality, integrity, and objectivity and in accordance with the relevant laws, regulations, and professional standards. Further, as one of the leading A&A providers, Deloitte has developed best-in-class training and methodologies, which embed climate considerations and keep pace with the relevant professional standards.
In addition, to demonstrate Deloitte A&A’s commitment to net-zero ambitions, Deloitte A&A has been monitoring four quality metrics in the audits of financial statements of the largest companies audited by Deloitte in carbon-intensive industries (e.g., oil and gas, industrial products, and electrical utilities) (“in-scope engagements”). The metrics were monitored for December 2022 and March 2023 year-end audits. For all in-scope engagements, the following activities have been performed, and all in-scope engagements achieved these quality metrics:
- Application of audit methodology - this quality metric measures the percentage of Deloitte in-scope engagement teams that performed specific audit procedures to determine whether climate risks were material to the financial statements taken in whole.
- Training - this quality metric measures the percentage of Deloitte engagement team practitioners assigned to the in-scope engagement teams at the manager level and higher that received training related to assessing and responding to climate risks in audit engagements.
- Communications - this quality metric measures the percentage of Deloitte in-scope engagement teams that discussed the relevance of climate risks to the financial statements and the audit with the audited entity’s management and those charged with governance.
- Reporting - this quality metric measures the percentage of Deloitte in-scope engagement teams that considered whether climate risks needed to be explicitly mentioned in their audit reports.
Deloitte will reassess the list of in-scope engagements periodically to reconsider our monitoring activities around considerations of climate-related risks on financial statement audits.
Climate-related stakeholder engagement
During the last year, Deloitte has also proactively engaged with key stakeholders, including policymakers whose activities affect business and industry and who could be effective in advocating for the establishment of public policies that support a net-zero transition of economic sectors in line with science and with regard to social impacts.
During FY2023, Deloitte engaged with a variety of stakeholders and policy influencers on public policy matters through a variety of mechanisms, including:
- Deloitte Global was a signatory to the World Economic Forum (WEF) Alliance of CEO climate leaders’ open letter addressed to world leaders in advance of COP27. As part of the WEF Alliance, Deloitte works alongside other members to increase net-zero transition activities by setting science-based targets, disclosing emissions, and advancing decarbonization efforts across global value chains.
- Deloitte is an active participant in the aviation sector of the WEF’s First Movers Coalition. Bringing together both government and business, the First Movers Coalition works to formulate purchase commitments, aggregate demand, and create an enabling environment for innovative clean technologies across eight hard-to-abate sectors. Within the aviation sector, Deloitte participates in coalition activities to advance net-zero goals, including involvement in the sector’s working groups.
- Deloitte Global published “Transform to React: Climate Policy in the New World Order,” an article outlining recommendations for governments and companies that wish to optimize their contributions to climate-related efforts collaboratively, while taking into account economic and geopolitical considerations that affect public policy.
- Deloitte India served as the 2023 B20 India Knowledge Partner for the Action Council on ESG and for the Taskforce on Energy, Climate Change, and Resource Efficiency, which included contributions to the development of policy recommendations for the G20.
- Deloitte developed “Work toward net zero: The rise of the Green Collar workforce in a just transition,” a report that identifies impacts of climate change and decarbonization on vulnerable segments of the workforce and outlines public policy principles that underly workers’ adaptation and equitable transitions.
- Deloitte coordinated with the Economist Impact Insight Hour to conduct a webinar featuring Deloitte, the International Organisation of Employers (IOE), and the International Labour Organisation (ILO), in which we discussed just transition, workforce vulnerabilities accentuated by climate change, and reactive adaptation policies.
- Deloitte developed the Using sustainability reporting to drive behavioral change report, which leverages insights from 25 interviews with leaders in the investment, business, academic, and nonprofit sectors, and identifies six conditions needed to encourage the adoption of sustainability reporting and create operating environments conducive to behavior change.
- Deloitte organized a LinkedIn webinar during COP27 that featured Deloitte and Janine Guillot, former CEO of the Value Reporting Foundation and Sustainability Accountability Standards Board, that explored how sustainability reporting can drive behavioral change in businesses and markets.
- Deloitte promoted long-term behavior change and the adoption of sustainability reporting and disclosures by authoring articles that were featured in Forbes and Accounting and Business.
- Deloitte Global presented and dialogued on the climate-related matters as a part of various regulatory and professional engagements, with the International Organization of Securities Commissions (IOSCO), the International Forum of Independent Audit Regulators (IFIAR), the Committee of European Auditing Oversight Bodies (CEAOB), and various other regulators and standard-setters, such as the International Sustainability Standards Board (ISSB) and the International Auditing and Assurance Standards Board (IAASB), as well as other stakeholders.