The report „Embedding ESG and sustainability considerations into the Three Lines Model“, co-written by the World Business Council for Sustainable Development (WBCSD) and the Institute of Internal Auditors (IIA), provides suggestions and guidance, on how environmental, social, and governance (ESG)-related matter can be integrated into the key roles of the revised Three Lines Model – being the governing body and management as the first two line roles and internal audit as the third line.
To be precise, the governing body shall integrate ESG matters within the strategic objectives, increasing awareness of such matters and active involvement within the organization’s ESG reporting. ESG reporting itself is part of the second line, namely the management, through developing an approach that captures the organization’s financial and non-financial assets. Furthermore, examining the assessment of materiality, as one of the management’s essential tasks, functions as a link between the organization’s operations, the stakeholder interests, and their impact on ESG matters. At last, being independent of the first and second line, the organization’s internal audit function shall examine and assure internal controls for reporting and disclosure of ESG-related information.
You can download the report here.