Publication

Audit committees play a crucial role in promoting strong corporate governance, through their involvement in risk oversight, internal controls, corporate reporting and audit.

New EU legislation is extending the mandate of boards and audit committees to include Environmental, Social, and Governance (ESG) matters. The European Commission proposal for a Corporate Sustainability Reporting Directive assigns a range of tasks for company sustainability reporting and assurance to audit committees. The EC proposal for a directive on Sustainable Corporate Due Diligence requires companies to implement a series of actions and policies to address adverse impacts on human rights and environment in their own operations and in their value chains.

This paper provides an overview of the expected role and responsibilities of audit committees, in light of relevant EU legislation and stakeholder demands. It includes recommendations for audit committees in relation to their ESG responsibilities with a focus on audit committee’s:

  • competencies and composition
  • responsibilities for ESG reporting and assurance

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