David W. Tate, Esq., San Francisco and California – dave@tateattorney.com

I have written about ESG in prior posts. The Center for Audit Quality has now also called for the development of standards and frameworks that present ESG, and, presumably will allow (and lead to?) the auditing of ESG.

In one form or another ESG and concepts similar or relating to ESG have been discussed for years – for how many years, I don’t know, maybe 10, or 20, or 30 years in one form or another.

And it is entirely possible that these concepts will be discussed but will remain in some form of limbo for another 5 to 10 years, or longer. Or, ESG, including the auditing of ESG can start essentially immediately.

Standards exist already.

When you are looking at auditing or an audit you naturally can get into discussions about numbers or amounts that are presented on the financial statements, or notes to the financial statements, or management’s discussion and analysis, and for public companies (of which size?), private businesses (of which status and size – family owned, pre-IPO, small, mid-, or large, or simply regular closely held, etc.), nonprofits, and governmental entities, etc. As the CAQ mentions, you can also get into jurisdictional scope issues, such as statewide, countrywide, or worldwide, etc., standards.

In concept, anything and everything can be discussed, disclosed, and audited. Here’s my recommendation: start small and reasonably certain, but just get started now, and then move forward from there . . . .

I view this from an “A,” “B,” “C” approach (similar to how I view evidence in a case). “A” – this is what you already have in hand. “B” – this is what you reasonably believe exists, and that you reasonably believe you can obtain from a specifically identifiable source, but that you do not now have. “C” – this is essentially uncertain or speculative – it might well exist or should exist but don’t count on getting it.

For ESG, start with standards that exist that generally are recognized by the most influential stakeholders or authorities within a jurisdictional location whether it be local, statewide, countrywide or worldwide. Currently you might only have 8-10 “A” generally recognized standards for “E” environmental, 6-7 “A” standards for “S” social, and 3-4 “A” standards for “G” governance – and that’s fine. ESG will be developing and changing for the next 100+ years. The point is to get going with this, now, and it is possible to do so.

The following is a partial snapshot from the CAQ online discussion.

Best to you, Dave Tate, Esq. (San Francisco and California) – dave@tateattorney.com

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

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Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

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