Economy

Accounting

The changing face of auditing in Colombia

The white heat of environmental auditing is increasingly felt across the real economy.

Green credentials are conspicuous in corporate literature and grace the pages of Annual Reports. Increasingly, they have graduated beyond virtue signaling by major polluters to forming a core part of tomorrow’s business model. Meanwhile, two years of a global pandemic have presaged a new way of evaluating the commercial ecosystem. And there is no denying that sustainability needs to be factored into corporate mission statements, industrial strategy, and economic policy. Not least when you consider the globally asymmetrical roll-out of environmental initiatives.

Once Upon a Time in Colombia
In 2012, Colombia signed its Green Protocol with the participation significant member banks of ASOBANCARIA, Colombia’s financial sector association. While a voluntary initiative, signatories of the protocol, representing over 50% of the domestic financial market, got the sustainability ball rolling. Those institutions champion sustainability through credit facilities and investment that advances sustainable business practice and national competitiveness. The protocol thus introduced the idea of measurable corporate compliance with green initiatives.

Enter the Green Audit
So, does this involve company books being scrutinized by an independent penguin? Not quite, interesting though the process is. What it amounts to is a corporate commitment to systematic self-assessment, during the identification, quantification, recording, reporting and analysis of environmental diversity. The audit, then, examines the impact of a company’s operations on the wider environment, and the environmental practices within an organization to mitigate this. Such evaluations lead to greater efficiency in natural resource and energy consumption in commercial operations. And at the employee level a commitment to ensuring deeper awareness of sustainability at work and at home is inculcated.

Green Taxonomy
After reproduction, food, and shelter, the taxonomic urge is the strongest us humans succumb to: the urge to classify, differentiate, and act upon those distinctions. And now taxonomy has entered its green phase, with Colombia setting the pace for Latin America. Optimistic observers insist that businesses will no longer engage in so-called “greenwashing,” the virtue signaling of ideals not backed up by commercial practice.

Colombia’s green taxonomy is part of the drive to secure public and private funding of goal-oriented environmental initiatives in a circular economy. Meanwhile, it seems that Colombia goes the extra mile by also covering land use, as forestry, agriculture, and livestock account for 59% of its greenhouse gas emissions.

The New Way to B
The pandemic, if nothing else, has accelerated a major rethink on the nature of the company, and its physical place in the broader ecosystem. So much so that the battle-cry of B Lab, an agent of corporate change is, “We won’t stop until all business is a force for good.” So, is this a snowball fight in hell? They insist not, being staffed by, in their own words, “standards experts, business analysts, development officers, product and program managers, people and culture specialists, partnership managers, storytellers, strategists, and engineers.”

The international organization has already won notable plaudits, ranking fifth on Fast Company’s annual list of the World’s Most Innovative Companies for 2020 in the Not-for-Profit category. The award recognizes companies’ tangible impact on industry and culture and acknowledges B Lab’s status as a “standards and global movement building organization, driving economic systems change around the world.”

“Certified BCorp” is a buzzword among those seeking a certain type of employer. And the same applies to product association, where an aware customer profile welcomes the credential at the till. In a holistic appraisal, evidence is sought of transparency in business and employee relations, and of green commitments in its dealings in the market. Undeniably, multinationals today increasingly expect their own environmental standards to be reflected across the value chain. The badge of honor for certified firms is a “B Impact Assessment” score of 80 or above. Significantly, too, Certified BCorps undergo a verification process every three years to ensure continuous improvement and sustained environmental commitment.

In the Rankings
Among the top-20 rankings of certified BCorps per country, the US heads the field with 1,418. Yet, Latin America appears shortly thereafter with Brazil in fifth place with 181 companies, just ahead of Chile with 135. Then comes Argentina in 10th place, with 119. Colombia makes an appearance in 12th place with 60 firms. The continent’s representation concludes with Mexico in 14th place on 53 and Peru 19th with 28. The 20th spot goes to China with 27 firms.

Colombia, then, is no laggard in the green arena, which promises to reap tangible rewards in terms of public awareness and environmentally sound business practice.

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