A profound shift in attitudes is underway all over the world. People are now recognising that 'progress' should be about increasing human happiness and wellbeing, not just growing the economy.



Auditing Sustainability and The Greater Good

Auditing Sustainability and The Greater Good

This article is co-written by Anders Liu-Lindberg and Wei Chien Yoong.

Is climate change a hoax? That has been a question debated by many. But for those of us living in the tropics, near the equator, temperature is rising, and raining season seems to be more erratic then before, and most peculiar would be some exceptionally cool weather which is hard to imagine near the tropics!

Now as finance professionals, we ask ourselves what the profession can do to make a difference to mother earth and humanity. While searching for an answer, we also realize climate change is not the only human survival issue, it is much broader – it is a question of how do we sustain our existence (in good quality) for generations to come. 

From research and work Wei Chien has done on the topic of sustainability audit, consensus appeared as: sustainability is an emerging risk area that is yet to be covered comprehensively by most traditional internal audit functions.  However, it is certainly an area of focus for the future. Most of the professional audit/ advisory services firms provide sustainability reporting and assurance services, focusing on reporting and regulatory compliance. There remain huge opportunities for internal audit to add value by partnering with businesses in addressing risks associated with social, environmental and economy and how to mitigate them.   

What is a Sustainability Audit?

Before we can answer the question, we probably need to have a conceptual understanding of what is sustainability There are many definitions, but the best will be a picture of 3 elements existing in perfect harmony, hence, ensuring life of our future generations are secured.

Now an audit can be an assessment of any of the above elements yet the most commonly focus area has been environment. However, an environment audit does not equate to a comprehensive sustainability audit hence businesses need to start exploring the other areas too.

Audit Approach

The delivery of such audit may take the form as what Anders and Maya Hotait have shared on the step by step model, from planning to contracting and recommendation. To do the sustainability audit effectively, an auditor certainly require those “internal audit master” characteristics that have been highlighted by Anders and Maya. However, a sustainability audit is certainly not a business as usual financial or operational audit! Below are the main differences you need to look out for if you want to audit sustainability. 

Strategic risk imperative and understanding of macro and megatrends: Sustainability is an emerging strategic risk for business, and an imperative for business survival. Audit has a role to call it out in a broader perspective, from changes in industry, consumer behavior; to much broader global public policy and agenda shift. To do this effectively, an audit master needs to collaborate with subject matter experts (both internal and external) to keep abreast of emerging trends.  

High level support: While connecting the external dots to specific sustainability opportunities or risks that a business is facing, the internal auditor is then able to conduct a progressive and productive discussion with the C-suite and audit committee, hence, lobbying for support. To effectively roll out the sustainability audit initiative in the organization, endorsement of senior leadership is absolutely critical. 

Collaborative and using external help: A sustainability audit takes a snapshot of the current state, in terms of policies, procedures and practices in sustainability. To make the audit meaningful, the current state will be referenced against industry best practices, and the audit identifies risks/opportunities across a wide range of sustainability categories. To execute the audit effectively, requires internal audit to leverage and work with different functions, notably supply chain, which encompasses most of the goods or services movement. Given that the skillset may not reside within the internal audit function, leveraging on external consulting company is common. 

Communicate and impact change proactively: To effectively communicate the findings and impact, internal audit is required to put on hat of the business stakeholder and here strong business partnering skills will be helpful. What will make the business stakeholders buy in to your recommendations?

  • Costs savings or waste elimination.
  • Broader consumer demand preference, new segment or market opportunity.
  • Reputation risk at stake.

If we get the above right, before internal audit knows it, there will be stakeholders knocking on the door for an audit visit, and that is the demand model internal audit should thrive for!  

Let’s Visualize it for You

As we started the post with weather changes at the tropics, let us talk about the role of sustainability audit in the world’s most controversial and rapidly growing industries: Palm Oil

A Malaysian conglomerate – IOI – has been under some external scrutiny on their sustainability practice last while. Specific areas under attack were – deforestation and labour abuses, which are the environment and society dimensions of sustainability. 

In hindsight, a sustainability audit driven by the internal audit team to evaluate customer demands or what is happening at the broader industry level would have benefited the company with an identification of opportunities vs threats. This is a great example of how internal audit by focusing on sustainability would be able to help you stay ahead of these issues and tackle them proactively. 

We Want to Hear from You!

While finance is exploring ways to better partner the business in midst of changing dynamics of profit, margin and risk, opportunities exist in the space of sustainability, where finance can be at the front line, influencing and driving on positive change to our community, environment and economic prosperity. 

What insight do you have on sustainability audits? What good practices have you observed? We encourage you to add it all in the commentary field and we will update the article as they tick in. If you disagree to some of the statements in this article what would you do instead? We look forward to feedback and comments to start a good discussion on sustainability, and how internal audit and Finance can pioneer the change.



Crescita sostenibile e finanza di A. Bubbio

Crescita sostenibile e finanza Le responsabilità dei CFO

Pianificare strategie di crescita che tengano conto di molteplici fattori.

Prestare attenzione non solo al profitto, ma anche al Pianeta e alle persone.

Cercando di mantenere invariato il grado di indebitamento.

Una crescita sostenibile anche sotto il profilo finanziario è possibile

"Come viene segnalato dagli studiosi più attenti ai temi di ‘frontiera’ e da alcune ricerche, sarà necessaria, rispetto al passato, una 3P growth strategy, dove la tripla P sta per Profit, Planet e People. In base a questo approccio si suggerisce di adottare una strategia di crescita che a livello aziendale presti attenzione: oltre ai risultati eco-fin e alla sostenibilità finanziaria della crescita (Profit), all’impatto ambientale della crescita aziendale (Planet) e alle conseguenze sociali della stessa (People).

Solo così si darà attuazione a una crescita sostenibile e duratura, anche quando il mercato tornerà a frenare."



A Sustainable Model : Profit People Planet

Responsabilità sociale: scatta l’obbligo per 300 società italiane


L’obiettivo dell’Unione Europea con la Direttiva 2014/95/Ue è quello di spingere le aziende a integrare la sostenibilità nel business.

Il recepimento in Italia delle nuove regole (con il D. Lgs. N.254/2016, in vigore da gennaio 2017) impone alle grandi aziende di depositare - dal prossimo anno - una dichiarazione di carattere non finanziario, per spiegare l'impegno nella tutela dell’ambiente, nella corretta gestione del personale, nella garanzia del rispetto dei diritti umani e nella lotta alla corruzione. Il documento deve essere redatto sotto la responsabilità del CdA ed è soggetto a revisione come il bilancio finanziario. 

Con il D.Lgs. 254/2016 si passa dalla responsabilità sociale d’impresa adottata su base volontaria a una rendicontazione obbligatoria per società quotate, banche, imprese di assicurazione che hanno almeno 500 dipendenti e almeno uno dei due requisiti seguenti alla chiusura del bilancio

  • Il superamento dei 20 milioni di euro di stato patrimoniale
  • e/o il superamento dei 40 milioni di euro nel totale dei ricavi netti delle vendite e delle prestazioni. 

Le società alle quali spetta quest’obbligo sono circa 300, con una sanzione per l’inadempimento che va da 20 mila a 100 mila euro

Le altre aziende, di dimensioni più piccole, possono redigere dichiarazioni volontarie di carattere non finanziario «conformi» alle disposizioni del D.Lgs. 254/2016.

Gli investitori sono sempre più interessati alle aziende con un elevato tasso di sostenibilità e sarà sempre più importante e necessario che la sostenibilità entri a far parte delle scelte strategiche di un’azienda

Il decreto di recepimento impone anche di inserire informazioni sulle misure adottate per prevenire le violazioni dei diritti umani, dato non sempre facilmente reperibile, in quanto richiede una conoscenza approfondita della filiera e della condotta dei fornitori, sia nazionali che esteri.

L’introduzione del principio “comply or explain” permette una maggiore flessibilità all'impresa per l'adeguamento del proprio sistema di governo societario alle nuove regole.

Nelle imprese italiane si evidenzia come ci sia un certo di ritardo rispetto gli altri paesi sui principi di sostenibilità e che le aziende dell’industria alimentare e dell’energia adottino con più frequenza il bilancio di sostenibilità e il bilancio integrato a differenza di quelle della moda e del settore assicurativo che diffondono meno informazioni sulle strategie di corporate social responsibility adottate. 

Gli effetti operativi delle nuove norme e la corretta applicazione dei nuovi principi saranno approfonditi nell'ambito dell’evento Paradigma “Le informazioni non finanziarie: reporting sociale e sviluppo sostenibile” che si terrà il 27 giugno 2017 a Milano con il qualificato contributo di esperti di corporate reporting e di responsabilità sociale.


Italy is the first among G7 and EU countries to fix its 2020 targets adding non-economic measures combined with GDP growth, country deficit and Debt to GDP ratio. Specific policies are then included in the Economic Financial Document (DEF) approved on April 12th 2017 to improve population well being. 

Thomas Jefferson’s proposal to politicians that “the care of human life and happiness … is the only legitimate object of good government.” Is taking some concrete steps.

Italy aligns also with United Nations aspiration that the pursuit of happiness is a fundamental human goal, recognizing the relevance of happiness and well-being as universal goals and aspirations in the lives of human beings around the world and the importance of their recognition in public policy objectives, recognizing also the need for a more inclusive, equitable and balanced approach to economic growth that promotes sustainable development, poverty eradicationhappiness and the well-being of all peoples.

Italy takes action despite uncertainty in defining and measuring Happiness

While the debate is still on how best define Happiness – by Wikipedia is a mental or emotional state of well being defined by positive or pleasant emotions ranging from contentment to intense joy but various research groups, including positive psychology and happiness economics are employing the scientific method to research questions about what "happiness" is, and how it might be attained and measured. Academia is still reflecting among the at least 3 types of definitions: economic happiness, well-being and eudemonic - after 7 years of preparation, Italian government selected 4 out of the many measures proposed by different international institutions to fix its aim.

While various international organizations (UN, OECD, EU commissions) are debating about the way to measure it, for example OECD has even issued in 2013 Guidelines that “mark an important turning point in our knowledge of how subjective wellbeing (happiness) can, and should, be measured” after its 2009 decision that individual well being should be multidimensional, taking into account individual assessment of his/her status as well as defining indicators about environmental and social effects.  In 2011, the OECD developed its first ever framework for measuring well-being, focusing on 11 key aspects of life: The OECD “How’s Life?” report provides evidence on well-being in 34 OECD countries and some emerging economies. The third edition on of “How’s Life?” was released in October 2015. In it 11 dimensions to define well-being were set: Housing Income and wealth, Jobs and earnings, Social connections, Education and skills, Environmental quality, Civic engagement and governance, Health status, Subjective well-being, Personal security, Work-life balance.

Then many institutions are trying to measure it while Italy decided to target it, taking the lead and publicly stating its commitment


Italy aims to a Fair and Sustainable Well Being 

Fair and Sustainable Well Being  (BES) Commission, born in 2010 with the intent to measure human well being (health, education) and social wellness, has finally identified the four measures that will base the non economic policies in Italy in the next 5 years. The first one is Average available per capita income that was flat at about 21.7k euros until 2016 will grow by 13% until 2020 to 23.9K euro where GDP is expected to grow half that percentage. Policies that will reduce taxation, ease access of people to work, reduce poverty should aim to reach that result. The second target is the index that measure Perceived inequality of income between top 20% of population with the bottom 20%. It will improve from 6.4 to 5.8 allowing a fairer distribution of wealth and income within the country. After the crisis the delta between these two groups has increased, then readjustment policies should be set. The third target measure Active population willing or available to be involved in the job market. Being unemployed is seen as one major cause of unhappiness then social support and specific policies will increase participation to work by about 10% allowing more people to work. Finally, CO2 emissions will grow less than the GDP improving its environmental impact.

For each indicator a macro economic model has been utilize to estimate both the trend and the impact of DEF.


To know more on BES: 

To Know more about Happiness how to measure, increase and manage 

Are you a giver or a taker? | Adam Grant

Pubblicato il 24 gen 2017
In every workplace, there are three basic kinds of people: givers, takers and matchers. Organizational psychologist Adam Grant breaks down these personalities and offers simple strategies to promote a culture of generosity and keep self-serving employees from taking more than their share.

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Monica Vitali aggiorna sul Bilancio Sociale

Non è certamente una novità dare informazioni che esulano dall’ambito eco-fin perché di bilancio sociale se ne parla da almeno 20 anni, e anche in assenza di veri e propri obblighi di legge molte imprese si sono già impegnate da tempo a rendicontare la propria sostenibilità in termini ambientali e sociali.


Questo perché la reputazione in termini di sostenibilità di un'azienda e dei propri marchiè diventata nel tempo sempre più importante per i consumatori finali (specie per i millennials), ma dietro non deve esserci soltanto un maquillage di facciata perché i clienti lo percepiscono se c’è autenticità e coerenza. Insomma, la trasparenza deve essere effettiva altrimenti rischia di diventare come quella di Volkswagen che chiosava la responsabilità sociale mentre manometteva i test sull’emissione dei gas inquinanti.


In quest’ottica l’economia della reputazione non è contraria al profitto, anzi, sembra che le imprese che la applicano abbiano performance migliori della media. Al contrario invece ammettere pubblicamente l’inattività su temi importanti può avere ripercussioni negative, specie per le grandi aziende alle quali il mercato chiede di prendere posizione sulla scacchiera dell’ESG (enviroment, sustenibility, governance) per essere competitive.


Ecco allora che il recepimento italiano della nuova direttiva 2014/95 a partire dal 2017 può contribuire ad arricchire lo scenario fornendo quella che dovrebbe diventareun’opportunità, anche nei mercati esteri o nei confronti del mondo bancario.


Sustainability for All