Until recently, sustainability information and management has been a secondary activity for many companies. Often, a separate sustainability department was created and given the responsibility for the development of sustainability projects and programs. As companies started to report on their efforts, this was conveyed via separate reports. Of course, over time things have progressed. In an increasing number of companies, sustainability is becoming a mainstream topic and reporting has become integrated in annual reports, giving it higher prominence.
It is only recently that sustainability is seen as a critical business topic that is correlated with an organisation's financial performance and that could impose a financial risk and/or opportunity. Investors are starting to notice the risks from sustainability developments, particularly climate change, and are slowly but steadily also starting to act on it. In this paper we highlight a few cases of fraud committed with sustainability information as a demonstration of the reality of sustainability-related fraud.
This paper is meant for companies and investors, to develop a further understanding of what inevitably is going to happen: as we know from our longstanding experience, financial interests not only come with positive drives towards better performance, they also bring risks of misrepresentation of relevant sustainable information-'fraud'. We also know from our work with clients for over 25 years that systems, processes and internal controls of sustainability information are generally not at the level of those for financial reporting.
It is time, therefore, to address the topic of sustainability fraud and provide you with the potential risks you should be aware of and the actions you can take to prevent and act on it. If you would like to discuss the content of this paper, or if you have any questions, please contact the authors of this paper.
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