Professional model audit - ESG alignment

In today’s business landscape, the energy and infrastructure community is under increasing pressure to ensure their supply chains uphold the highest standards of Environmental, Social, and Governance (ESG) practices. These expectations extend to financial model auditors, who must demonstrate not only technical accuracy but also alignment with their stakeholders’ values.

Model auditors who embrace ESG principles in their operations and outputs enhance the credibility and integrity of their work. From environmental sustainability to social responsibility and governance excellence, aligning with ESG standards is a hallmark of a professional model auditor.

Environmental standards

For model auditors, meeting “E” involves reducing their own operational impact.

Take carbon reduction, for example. A model auditor committed to sustainability will actively minimise emissions from business travel, office operations, and procurement. Many firms now set net-zero targets and adopt practices such as paperless workflows and renewable energy use to reduce their environmental footprint.

Social responsibility

“S” extends to relationships with employees, clients, and communities. Social responsibility is about taking measurable steps to promote fairness, inclusion, and well-being.

Model auditors can demonstrate social responsibility through strong diversity, equity, and inclusion (DEI) policies. This might include initiatives to increase representation at senior levels or fostering a culture of inclusivity. For stakeholders, partnering with a socially conscious model auditor reflects their own commitment to ethical practices.

Community engagement is another area where model auditors can show leadership. Supporting financial literacy programs, sustainability education, or pro-bono projects demonstrates a commitment to positive societal impacts, which resonates with stakeholders.

Governance

“G” involves maintaining transparency, objectivity, and accountability.

Model auditors should implement key governance measures, including anti-bribery and corruption frameworks, supported by clear reporting mechanisms and whistleblowing policies. These ensure model auditors operate with integrity and mitigate risks of unethical practices. Strong data privacy and security policies are equally critical, particularly for regulated entities handling sensitive financial information (see earlier article).

Transparency is also central to governance. Model auditors should disclose their ESG commitments and practices, demonstrating accountability to both clients and stakeholders. This openness builds trust and reflects a shared commitment to high standards.

Takeaways

Choosing a model auditor who aligns with ESG principles is not just about meeting compliance requirements—it’s about stakeholders being able to work with a firm that shares its values. For regulated entities, this alignment strengthens stakeholder trust, reduces reputational risks, and ensures the supply chains they rely on are built on a foundation of integrity.

While all firms aim to support ESG goals, larger professional service firms often have the resources and systems to embed these principles deeply into their operations. Their scale allows them to meet the more complex demands of energy and infrastructure projects, offering greater assurance for stakeholders in a rapidly evolving regulatory landscape.

Ultimately, a professional model auditor with a strong commitment to ESG principles is more than a service provider—they are a partner in fostering a sustainable and ethical future.

In our next post, we will conclude this series by providing a practical checklist for evaluating the key criteria for selecting a professional model auditor – including how we at Forvis Mazars rise to meet these challenges.