In the dynamic world of corporate sustainability, the importance of reliable and trustworthy reporting has never been greater. As organizations strive to meet the evolving expectations of stakeholders and mitigate associated risks, the implementation of effective internal controls is imperative. In response to the growing significance of sustainability reporting, COSO released new guidance in 2023, specifically addressing how the internal control framework can be seamlessly applied to enhance sustainability reporting practices. View this infographic to learn about some of the key challenges for internal controls of sustainability reporting. To read more on effective internal control over sustainability reporting, read our blog here - https://corporater.com/blog/effective-internal-control-over-sustainability-reporting/?cmc=SL

1. Key challenges for
internal controls of
sustainability
reporting.
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Effective internal controls are key for companies to meet the
new reporting requirements and the increased expectations
of ESG risk handling. Here are a few significant challenges
for internal controls of sustainable reporting according
to COSO.

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Immature Systems:
Sustainability reporting often lacks mature systems
and processes, which can lead to inconsistencies
and inaccuracies in data collection and reporting.
1
Unstructured Data:
Sustainability reporting relies on unstructured data from
various sources, such as spreadsheets and emails, making
it difficult to manage, analyze, and ensure data quality.
2
Data Variety:
Sustainability reporting integrates data from multiple
internal systems, including human resources, facilities,
operations, and procurement, which can be complex to
coordinate and consolidate.
3
Incomplete Data:
Ensuring the completeness of data for sustainability
reporting is challenging, as different data sources may not
provide a comprehensive picture of an organization's
sustainability performance.
4
Data Accuracy:
Maintaining the accuracy of sustainability reporting data
can be difficult due to data errors, inconsistencies, and
manual data entry processes.
5
Data Integration:
Integrating sustainability data from various systems and
sources can be a significant challenge, as data may not be
easily compatible or standardized.
6

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Inadequate Technology:
Many existing platforms for Environmental, Social, and
Governance (ESG) reporting are inflexible and may not
provide the necessary tools for effective data
management and reporting.
7
Reporting Framework Complexity:
The complexity of different reporting frameworks (e.g., GRI,
SASB) can make it challenging to align data collection and
reporting processes with industry-specific standards and
stakeholder expectations.
8
Lack of Expertise:
Organizations often struggle to find personnel with the
necessary expertise in sustainability reporting, internal
controls, and data management, leading to potential
errors and inefficiencies.
9
Regulatory Changes:
Evolving sustainability reporting regulations and standards
can create challenges in keeping internal controls up to
date and compliant with new requirements.
10
Stakeholder Expectations:
Meeting the diverse expectations of various stakeholders,
including investors, customers, and regulators, can be a
complex task, as their sustainability reporting needs may
differ.
11

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Addressing these challenges requires a systematic approach to
internal controls for sustainability reporting, involving the integration
of technology, data management practices, and expertise to ensure
the reliability, accuracy, and compliance of sustainability reporting
efforts.
Data Security:
Ensuring the security of sustainability data, especially if it
includes sensitive information, is essential but can be
challenging in a world with increasing cybersecurity
threats.
12
Resource Constraints:
Many organizations may lack the necessary resources,
both financial and human, to effectively manage and
control sustainability reporting processes.
13