External audit is an independent review of a company’s non-financial disclosures and internal controls by an external auditor. The purpose of an external audit is to provide assurance to stakeholders that the non-financial statements are free from material misstatement and that the internal controls are effective.
Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. The purpose of internal audit is to provide assurance to management that the organization’s risk management, governance, and internal control processes are operating effectively.
Internal control is a process designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of non-financial reporting, and compliance with applicable laws and regulations. The benefits of internal control include improved operational efficiency, accurate non-financial reporting, target follow-up and compliance with laws and regulations
Frameworks and indices
As part of the EU’s green growth strategy, the EU taxonomy came into effect in 2020. This is a classification tool for environmentally sustainable investments. Essity has analyzed its operations to comply with current and future disclosure requirements. The company’s sales (turnover), capital expenditure and operating expenditure are to be reported in accordance with Nomenclature of Economic Activities (NACE) codes. The EU is yet to determine which economic activities are to be deemed environmentally sustainable under each NACE code. The same applies to additional subordinate economic activities identified in the analysis of Essity’s sales, capital expenditure and operating expenditure. Most of Essity’s economic operations can be allocated to the pulp and paper industry. Essity’s sales (turnover), capital expenditure and operating expenditure are therefore not covered by the taxonomy directive for this reporting period. For taxonomy tables, see the Annual and Sustainability Report.
Essity reports sustainability information in accordance with the Global Reporting Initiative (GRI) guidelines for GRI Universal Standards. Essity’s Annual Sustainability Report is structured in accordance with GRI principles, meaning that the content is determined by the issues that are most material to Essity and its stakeholders, and that the content provides a complete overview of the operations. Essity’s 20 subject areas in the materiality analysis are matched against GRI indicators, and they form the selection of the indicators that Essity presents in this report. Essity reports on all GRI indicators that are identified as material and on a relevant level. Any omissions or incomplete data are commented on directly in the GRI index. The Sustainability Report has been reviewed by EY.
The UN Guiding principles
Essity uses the reporting framework for the United Nations Guiding Principles on Business and Human Rights and reports annually on the overarching aspects contained in the framework.
Task Force on Climate-related Financial Disclosures (TCFD)
Since 2020, Essity is publishes its TCFD index in the Annual Sustainability Report to allow investors and other stakeholders easy access to TCFD-related information for comparisons or decision-making.
Sustainability Accounting Standards Board (SASB)
Since 2020, Essity has applied the standards applicable for the Household and Personal Products sectors. A detailed index with references to sections where Essity reports in relation to specific disclosures is available in the Annual Sustainability Report.