Internal Audit's Role in GHG Emissions and Energy Reporting: Evidence from Audit Committees, Senior Accountants, and Internal Auditors

Internationally, disclosures related to greenhouse gas (GHG) emissions and energy usage have increased dramatically due to trends toward increased sustainability reporting, growing concerns about climate change, and the introduction of new legislation and taxes. Audit committees, management, internal auditors, external auditors, and other stakeholders all have a potential role in relation to GHG disclosures. Our study addresses the role of internal auditors. We conducted 29 interviews with senior audit committee members, senior accountants, in-house internal auditors, and partners specializing in internal audit from the major accounting firms. These interviews allowed us to gain insights into the present role of internal auditors in GHG/energy reporting, the factors explaining internal audit's role, and the future role of internal audit. In addition, audit committee members describe their present involvement in GHG/energy reporting. We consider the consistency of our findings with three corporate governance theories (agency theory, institutional theory, and resource dependence theory). Although our results support the importance of effective monitoring consistent with agency theory, no one theory fully explains our results.