Environmental Sustainability - key considerations for audit committees within the public sector
Environmental Sustainability - key considerations for audit committees within the public sector
A Net-Zero Health Service
On 1 October 2020, the UK’s National Health Service (NHS) became the world’s first health system to commit to delivering a net-zero service, an ambitious target which would see net-zero achieved earlier than the UK government’s target for a net-zero economy of 2050. The NHS Public Board set two targets in its net-zero strategy, ‘Delivering a ‘Net Zero’ National Health Service’:
- For emissions controlled directly by the NHS (the ‘NHS carbon footprint’) or more net-zero by 2040, with an ambition to reach an 80% reduction by 2028–32 (widely referred to as Scope 1 and 2 emissions)
- For an extended set of indirect emissions including those that they can influence in the supply chain (the ‘NHS carbon footprint plus’): net-zero by 2045, with an ambition to reach an 80% reduction by 2036–39 (widely referred to as Scope 3 emissions).
Green Plans – NHS Trusts
To support the coordination of carbon reduction efforts across the NHS and the implementation of this national strategy at a local level, there are standard contract requirement for Trusts to develop a Green Plan to outline their approaches to reducing their emissions in line with the national trajectories.
Green Plans – Integrated Care Systems (ICS)
Each ICS is also required to develop a Green Plan which should summarise the Green Plans of relevant partner organisations, while also outlining how system-wide priorities will be addressed. This provides the opportunity to link preventive and joined-up care principles, tackling health inequalities, and system partnership objectives to wider sustainability objectives across the system.
Public Sector Sustainability Reporting
On 14 June 2023, the International Public Sector Accounting Standards Board (IPSASB) began development of climate-related disclosures standard for the public sector.
Lessons Learned from BDO Environmental Sustainability Reviews
Understanding and embedding effective frameworks to address environmental sustainability issues (including net-zero goals) helps organisations improve staff engagement and devolve ownership of addressing sustainability. In turn, this will help foster a culture where sustainability forms an integral part of day-to-day operations and decision making rather than being considered as an added extra.
Some key challenges facing organisations we have observed:- Embedding in the operational
- Environmental sustainability principles are not incorporated into all key operational policies and procedures we would expect
- There is not local ownership of environmental sustainability issues in the context of operational activity of departments/wards and environmental sustainability principles are not consistently woven into operational objectives. Progress is generally driven by a Sustainability lead/team
- Risk assessment
- Formal assessments of the risks and opportunities associated with the delivery of an organisation’s Green Plan and how this affects the priority of actions in each action area are not consistently utilised
- All organisations we reviewed failed to fully complete actions within the first year of their action plans and we observed a lack of prioritisation of actions that will make the biggest impact
- Data and reporting
- Whilst internal reporting structures are generally in place, there is not always sufficient oversight of progress against targets within Green Plans at the executive/Board level
- Data collection has been limited, and affects the ability to prioritise actions, and report on progress made.
How BDO can support you
Environmental Sustainability Reviews
We have significant experience of undertaking reviews into NHS organisations’ approach to environmental sustainability. This includes assessing governance structures, performance monitoring, and evaluating risks in context of the specific organisation’s activities.
We also review the approach taken to develop Green Plans and to meet Standard Contract requirements.
Partnership Working
We have extensive experience of working with ICBs and providers on their approach to partnership working. Our team also consists of clinical, organisational culture, soft controls, equity, diversity, and inclusion (EDI) specialists, and we use an integrated approach that is tailored to the local context.
Outsourced internal audit services
We provide internal audit services to a significant number of NHS Trusts and ICBs. As part of this, we consider Environment, Social, and Governance (ESG) risks in every single audit we undertake. We understand the role that every service, department, and individual has in contributing to your organisational goals for environmental sustainability and can provide assurance throughout the internal audit provision.
Who to contact for support
- Firm-wide Initiatives - Greg Rubins, CPFA Partner (07710 703 441)
- Support in the South-West - Adam Spires, ACA Partner (07966 283 645)
- Support in the Midlands - Gupreet Dulay, CPFA Director (07870 555 214)
- Support in London - Aaron Winter, FCCA Director (07442 851 860)
- Third Party Assurance Support - Janine Combrinck, ACA CA(SA) Director (07879 816 470)