June 6, 2021 • 28 mins
Tiina Landau is an internationally recognized sustainability expert and Certified European Financial Analyst (CEFA). She currently works as Sustainability Manager at Neste Corporation, embedding sustainability considerations into new business models and supply chains.
She has extensive experience as a speaker in media and seminars and also writes a column in the Finnish financial newspaper Kauppalehti.
In this episode, we discuss Tiina's book: Sustainable Investing - Beating the Market with ESG. We also explore how internal auditors can help their organizations navigate ESG risks and opportunities.
Links:
- Tiina's book: Sustainable Investing - Beating the Market with ESG (www.palgrave.com/gp/book/9783030714888)
- Tiina on LinkedIn (www.linkedin.com/in/tiinalandau/)
About this podcast
The podcast for performance auditors and internal auditors that use (or want to use) data.
Hosted by Conor McGarrity and Yusuf Moolla.
Produced by Risk Insights (riskinsights.com.au).
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:07):
You're listening to the Assurance Show.
The podcast for performanceauditors and internal auditors
that focuses on data and risk.
Your hosts are ConorMcGarrity and Yusuf Moolla.
Yusuf (00:20):
Today we have Tiina Landau.
Tiina is a sustainability expertbased in Helsinki, Finland.
Hi, Tiina.
Tiina (00:27):
Hi, thanks for inviting me to the show.
Yusuf (00:29):
Do you want to kick off and give us some of your
background and what broughtyou into consulting around
sustainability investing?
Tiina (00:35):
Yes, definitely.
So I have a diverse background.
I've studied business in abusiness school in Finland and I
focused on sustainability there.
During my studies, Itried different kinds of
things in sustainability.
I interned for an NGO andconducted international
projects and developmentaid, and some sustainability
analytics and modeling.
But after studies, I got intoa large Finnish financial group
(00:57):
working in asset management.
So that's when I first gotinto sustainable investing.
At the time we were maybe20 persons active in the
sustainable investing society.
And it was a small group.
So when I told what I wasworking on, it usually there
was kind of a blank face.
Nobody really knewwhat it was about.
It wasn't such a bigtopic then at the time.
After that I worked inmanagement consulting and
(01:18):
I was doing sustainableassurance of companies, also
sustainable strategies andlooking at where companies
should focus and also how thatinformation can be verified.
After that I worked insustainable investing.
I was leading that fora large pension insurer.
And that got me into a lotof starting from scratch,
thinking of first reading thismethodology document, what is
(01:41):
sustainability analytics about.
At the time there wasn't a bookor training that you could take
in order to learn your job.
So I had to learn by practicethat I was asked to analyze
something and then had allof these discussions with
the portfolio managers.
Also, I was preparing thevoting instructions, for
general meetings of companiesand engaging with companies to
pursue sustainability agendas.
(02:02):
So to promote sustainablepractices, both in
Finland and abroad.
In my current job, I am workingat an industrial company,
which focuses on sustainablefuels, and I'm leading
the system de-risk work.
So whenever we have newbusiness initiatives and,
we're looking at supply chains.
So I'm combining sustainabilityrisk information with
(02:23):
mitigation action plans of howwe should address the topics.
Yusuf (02:27):
Why sustainability?
Why is it important to youand what made you decide to
focus on it, so specifically?
And then why is it importantto organizations to understand
what sustainable investing is?
Tiina (02:38):
It's important for both investors at companies.
So, when you look at investors,it's about how to address all
the risks and opportunities,because there's so many topics
when we speak about ESG.
So environmental, social, andgovernance topics, and there's
risks related to all of them.
So a company that doesn'tmanage all of those, they
have more risk compared tocompanies that are actually
(03:00):
looking into topics likeclimate change, water scarcity,
human rights, et cetera.
So legislation pressure, butalso customers and investors
are interested in those.
And sustainable investors wantto make good profit and also
promote a more sustainablefuture at the same time.
And personally, I find that,first it's a meaningful area
(03:20):
to be focused on, but also Ithink it's endlessly interesting
because you have to understandthe big picture of the business
and the environment that allthe businesses are working on.
There's a lot to analyzeand it's complex topics
that are also meaningful,so I find that inspiring.
Conor (03:36):
You mentioned there that you find the whole topic
of ESG endlessly interesting.
And on that point, you'vegot a book coming out.
So what's thetitle of your book?
Tiina (03:45):
"Sustainable Investing, beating the market with ESG."
So we want to explain how youcan do sustainable investing.
And of course, it's alsorelevant for companies to
understand how to analyze, butalso how you can make profit,
while being sustainable.
So basically there's bothof those aspects and it
doesn't mean that allsustainable investing is
profitable, but there areways in which you can do it.
(04:07):
And, here we combine mypractical expertise, so
all the analysis I've doneand engagement of what
works and what makes senseand all the analytics
tools, what is available.
So that the next person doesn'thave to read a hundred piece
of analysis to understand howto get the relevant out of it.
So trying to help the nextperson who's doing that.
And also looking at what arethe key trends in sustainability
(04:30):
that should be focused on.
There's also the secondaspect, I've written it with
an Associate Professor, HannaSilvola, and we've gathered
also the most recent academicresearch to the topic.
So there's a uniquecombination of both aspects.
Conor (04:44):
So as part of your research for the book and
your analysis, did youhave to speak with varied
companies and differentstakeholders and individuals
to get their perspectives?
Tiina (04:54):
Yeah.
So basically there's bothof course my insights of
working years in the fieldand what I've learned.
And then also a lot of casestudies and interviews.
Many of those companiesthat I have been in
co-operation with before.
And I knew that this companyis really good on climate,
this is really gainingsustainable development
goals, this company hastheir fund selection process.
(05:14):
So we wanted to giveexamples that could inspire
anyone to take action.
So good practices and somethingthat if you have limited amount
of resources and a small team,you can still get into it.
And then if you have a bit more,then what you could focus on?
And I wanted to hearthought leaders, what
they thought and inspiredifferent kinds of thinking.
Yusuf (05:35):
There's the word sustainable investing as
you have as the title ofthe book and the topic of
the book, but also there'sa lot of talk about ESG.
So environmental, social,and governance factors.
What's the interplay betweensustainable investing and ESG?
Are they the same thing?
Does one drive the other?
Tiina (05:52):
We use them interchangeably in the book, but
of course, if you speak aboutsustainability and ESG, there's
a bit of different emphasis.
ESG, as you mentioned it,means environmental, social
and governance topics andaddressing them in your
investment decisions.
And of course you cannot treatit all so that you decided,
okay, I'll take the risk.
As long as you areaware of the risks.
So it doesn't make the investingsustainable necessarily.
(06:15):
But then if you speak ofsustainability in general,
it's something that thekind of activities that
are meeting the needs oftoday without compromising
the needs of the future.
So there's this wholesustainability discussion.
So that's more about actionto the right direction and
what the future looks like.
So there's a bit of differentemphasis, but in this kind
of everyday language, theyare often looked at as one.
(06:37):
And also if you look atsustainability, there's a
whole range of topics thatare not maybe covered.
Especially in the governancesection, like often looking
at board composition and thiskind of benefits to board
members and related partytransactions and whatnot.
If you really goto the concepts.
But we didn't want to, we wantedto have practical guidance.
So we are not making thisdistinction in the book.
Conor (06:59):
The whole field of ESG is certainly a topical
area and a growing field.
What would you see, Tiina,as the role of assurance
professionals or internalauditors, in trying to bring
forward ESG views or assistwith ESG activities within
their specific organizations?
Tiina (07:17):
I think it's really key and it's not used
enough as a resource.
I've done both.
I've been doing internalaudit, I've done assurance
and I've also been as asubject to both of those.
When you look at any company,closely enough, there's always
something where they're laggingbehind in sustainability.
And it's a lot better ifyou notice that internally,
than if you wait for someNGO, for example, or some
(07:38):
governmental actors to find it.
And there could be blind spots.
There are many companiesthat do their sustainability
strategies, but is itimplemented everywhere?
Are you looking intoyour supply chains?
Maybe that's the mostobvious place to start.
What about when you're sellingproducts to your customers?
There could be, for example,cases of some communications
equipment sold somewhere,and then used somewhere to
(07:59):
suppress freedom of expressionor something like that.
So there, there can be, it canbe related to a lot of topics.
Then what about when you do M&A.
Is the sustainabilityteam involved when
you're buying companies?
When I was in as an analyst,I noticed the company had
bought parts of a companythat was blacklisted by
many, many investors.
So you really want to besure that you have checked
(08:19):
that you're not buying byaccident, the blacklisted
operations from that company.
Obviously it could be partof your basic legal due
diligence, but not necessarily.
So you need sustainability,where it's material
throughout the operations.
And even if you havea really good team and
they're doing their all.
Even they can benefit.
If the internal auditorgoes directly to the
(08:39):
board and says, wait, thishas to be done faster.
This is where youhave to focus on.
Because often the sustainabilityteam doesn't have that,
direct aspect, of gettingaccess to the highest
level of the organization.
So I think the internal auditorcan push the sustainability
agendas and kind of supportthe internal work that
is already being done.
And even if, you know, mostof them can fail on something.
(09:01):
Like if you look longenough, like and far enough
in the supply chain, forexample, there's always
going to be something.
But if the company is ableto tell that wait, this
is everything we did, thisis what we had in place.
This is our systems and westill have that failure.
So you're in a much betterposition than if you say
that you did nothing.
So I think internal auditdoes definitely have a
role to play in that.
And then about assurance.
(09:22):
I think there's a lotof discussions about the
sustainability numbers.
And there are investors whoare, for example, buying
really sustainable companiesand then shorting those
that are lagging behind.
There was this hedge fundthat told me that they wrote
to one of those companies.
We think you're going to havea flash accident any day.
And this is becauseof your numbers.
And then there is.
No, wait, we did a, youknow, something like tenfold
(09:44):
error in the numbers.
And that's even myself,I found that when asking
about the numbers.
So that's why I thinkit's really good to have
assurance and internal audit.
So what was striking to me isthat when you look at financial
statements, the numbers don'tusually change in the audit,
but with sustainabilitywhen I've done assurance,
I've even changed two-thirdsof the numbers because you
(10:05):
know, there's one personwho could be in the basement
on her own calculating thenumbers, and maybe she put one
subsidiary to the wrong column.
So that's why I think that'sa lot of reasons to do
some kind of checking thatsomebody else is actually
going through all those.
Yusuf (10:20):
Historically, there's been a lot of focus on
financial statement numbers.
And we've got very wellestablished practices
and frameworks andstandards around financial
statement audit numbers.
So making sure the balancesheets, numbers wise,
are correct and incomestatements, et cetera.
What are you seeing in termsof the equivalent external
type assurance, external typeaudit around sustainability,
(10:43):
given its rising importance.
Tiina (10:45):
There's two levels that can be applied.
There's limited andreasonable level of assurance.
And most go with the limitedlevel, at least in the
markets that I'm looking at.
And that means that when, youknow, an auditor says that I
guarantee that everything'scorrect and nothing was omitted.
Then limited assurance,they always often say
that the statement that, Iguarantee there's no reason
to believe that everythingwouldn't be correct.
(11:07):
And so it's sort ofthe opposite way.
So it's a bit less of certainty.
And also the other thing isthat some auditors or assurers,
they look at the numbers andsome also look at the text.
And some look at part of thenumbers or part of the text.
So that's the other thing aswell that you have to focus
like which part is looked at.
And obviously if you lookat the text, you cannot
(11:28):
omit controversies.
But if you don't there'sso often, like when you
look at companies, you goto the financial statements
somewhere in the appendix andyou notice there's been this
huge legal debate and theyare preparing to pay for, for
example, for some corruptioncase, or environmental damage.
And they might omit thatfrom the substantive report.
That's something to focus on.
What is the coverage?
(11:49):
If you have no internalcontrols, then the assurer
can do only so much.
So both focus on what to do.
And even if you have a shares,there's obviously there's still
a lot of room to decide on howto calculate the figures, what
to include, what is the scope?
For example, in Europe, there'sa lot of legislation planning
and the reporting stuff.
So, so let's hope at some pointit becomes more unified, but for
(12:12):
the time being, you also have tohave a bit of flexible approach
when you're looking at thenumbers and even so you cannot
do sustainability analytics,just based on numbers.
Like think of a companythat has had a, really,
a lot of accidents forthe last five years.
Are they going to haveas much accidents for
the next five years?
Not necessarily.
(12:32):
Maybe they have a huge projectto get that to the right track.
So you have to look atthe management as well.
Yusuf (12:40):
If you were an internal auditor within an
organization that hadn'tdone any internal audit work
around sustainability or onESG, where would you start?
And what are the core thingsthat you would focus on?
Tiina (12:50):
I would start where I started as an analyst as well.
I will go to the webpageof the sustainability
accounting standards board.
And they have looked at eachindustry and which topics
are material for each.
So for example, if you'rea construction company,
then you maybe look atthe worker's rights, gray
economy, business ethics.
Is there kind of any corruptioninvolved and supply chains
(13:14):
where the materials comingfrom, if that's in your,
sphere of influence and ifyou have subcontractors.
So the first thing is tolook at what is material
and then go forward fromthere to see where it lies.
And you have to startwith a broad approach
Who is responsible forsustainability and are they
part of the right tables?
So when companies makingdecisions, is it considered
(13:35):
and also when in theoperational level, how is
it implemented in practice?
Conor (13:39):
So one of the themes in your book, the
evolution in the reporting ofsustainability metrics and how
that's changing all the time.
And you just mentioned therethat, certain industries
have material thingsthey need to report on.
I wondered if there's any sortof enforcement for noncompliance
of that reporting, or howdoes that look like when
companies aren't reportingon the metrics that they
(14:00):
should be reporting on?
Tiina (14:02):
Well at the moment, most of it is voluntary.
If you look across all thetopics the standard that is most
common is the global reportinginitiative and their companies
can actually decide themselves.
What is material?
They're supposed to look at thelargest impacts and what are
the stakeholders interestedin, but there is some leeway.
So that's why also thesustainable accounting
standards board comes intoplay because they say these
(14:24):
are material topics, and thisis where you should focus
on, that part is voluntary.
Then there's regionallegislation, for example,
about human rights legislationin Australia, in California,
some European countries, suchas UK and France that are
making some in this one area.
Different kinds of regulationsof what you should report
and what you should doto address human rights.
(14:46):
And then EU has somelegislation about sustainability
reporting as well.
So there are certain topicsthat have to be covered, but
even that is only for largecompanies at the moment.
So there isn't somethingthat covers the whole world
and all of the companies,but we are getting there.
Human rights is that topicthat has first started, but
at least in Europe, it lookslike there will be more
(15:08):
topics that will follow.
Conor (15:10):
Have you encountered where internal audits have
been used to verify, externalreporting on sustainability.
Is that somethingyou've come across?
Tiina (15:20):
I've been the subject of that.
So, so yes, I have comeacross that , but of course
it's usually internalaudit has a wider scope.
So I guess that's actuallya good place for internal
auditor to start if you'redoing your first assignment.
Not just look at what companiesshould be doing, but also about
the reporting, because then youcan ask what's behind that, but
often you also go as an internalauditor because you can also
(15:43):
benchmark against best practice.
So I think that's somethingI would recommend to do.
Because sustainability isabout constant development.
So it's good to say that whatyou're saying externally,
that is accurate, butwhere should you be going?
Are you doing enough?
Yusuf (15:58):
Both external audit and internal audit are often
seen as, not necessarilyinsurance policies, but
a way to assure against.
And then alongside that youwant to potentially have
some insurance in placeto take care of certain
risks that you might face.
In your upcoming book,you have a discussion
around data protectionand information security.
(16:20):
And there's some talk aboutmalware, ransomware, breach
of information, et cetera.
But also around insurance thatyou need to have in place,
and what that covers for you.
What do you think moregenerally about insurance as a
replacement, if you like, forgood risk management around
certain sustainability topics.
Tiina (16:38):
They should be the different lines of defense.
So it shouldn't be the onlyone that is applied insurance.
I guess that's a bit, well,kind of late in the process.
So, and also internal auditthat cannot, you know, you
know, cover like insteadof risk management and
that kind of cover forthe actions that are done.
And of course you need buy-infrom the whole organization.
And can you insure all thesustainability risks today?
(17:00):
Can you, in the future.
There's already caseswhere, for example, we are
speaking about coal miningor areas where there's
climate change impacts and.
for example, they could be toomuch water or too little water.
That's one of them, topicsof climate change can close
with the physical impacts.
So can you insure allthe sustainability risks.
(17:20):
At the moment already,we can see that insurance
companies cannot takewhatever risks that are there.
And maybe if you lookfive or 10 years from
now, is that possible?
So obviously companies canhave insurance policies,
but you also want tomanage the risk and issue.
What is left?
Yusuf (17:35):
Similarly to the way in which you would evaluate
other insurance that you havein place, we need to ask the
questions about is insuranceactually going to make sense?
So if, responsible peopletell you as an internal
auditor that we haveinsurance and, we're covered.
We need to go a bit deeperand say, is the insurance
going to cover us now?
Is it going tocover us in future.
Is there anything we needto think about that may not
(17:56):
be covered by our policies,for example, that could
land us in big trouble.
Tiina (18:00):
Yeah.
Even if it covers,then, you know, they're
still going to be somedisturbance to your business.
So would you really ratherwait for example, at your
factory that lets, theinsurance will cover it.
If I'll have a huge problemor would you rather organize,
your operations in a way thatthere will be no stoppage
of your business in thecase of some, for example,
extreme weather event.
So, so there's only somuch that can be covered
(18:22):
with money, I guess.
Narrator (18:24):
The Assurance Show is produced by Risk Insights.
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Now back to the conversation.
Conor (18:44):
You've said in the book, Tiina and I'm paraphrasing here.
So forgive me.
You said ESG ratings canscore, company's governance.
And internal audit andcontrols testing while they
can reveal many issues.
They're not always able todelve into the behavior and
ethical choices of individuals.
Is this something that youthink that internal audit
(19:04):
needs to get better at doing?
Or do you see some limitationson internal audit's role and
sort of trying to understand thebehavior and ethical choices?
Tiina (19:13):
Well, obviously internal audit, cannot
discover everything that'sgoing on at the company.
And often the us is whistleblowing hotlines, for example,
which enables employees,but also the foreigners and
subcontractors to complain of.
So that's also, I guess, roleof learning internal audit
to then research accusations.
Other books that I've readabout how anybody can be a
(19:33):
fraud detective by Nigel Iyer.
And I think that'sreally a good idea that.
If you can get that competencewithin the company, that anybody
can spot red flags, like thebusiness and sustainability,
and the also even if it's notin your personal expertise,
then something that I heardfrom a compliance officer,
for example, if it doesn'tfeel right, it probably isn't.
(19:55):
So that more people learnto trust their guts.
And also when there's somethingthey might not be able to get to
the bottom of it, if you're notreally inside to some kind of
financial numbers, for example,or maybe you don't have access
to the information, maybe it'snot in your role to find it out.
But if you can kind ofspot something and you get
the right, person aware ofthat, for example, through
(20:16):
the whistleblower hotline,then you can detect it.
But it's also about theculture sort of are you making
this kind of rules based, soyou can have a hundred page
manual about what you shouldand shouldn't do, but you can
always find a loophole as well.
If that's the kind of culturethat you're looking at.
As a leader, I guess, whatkind of a company do you
want to establish and areyou teaching people that.
(20:36):
Okay, you have to think ofwhether it's ethical as well and
whether this is right and notjust saying that, is it legal.
If you expect the sustainabilitypolicy to address everything,
then you're always going tofail because you're not going
to know what are all thequestions that somebody is
going to face in the future.
Conor (20:51):
Yep for sure.
Yusuf (20:52):
You've got a specific topic that's fairly early
on in the book, thattalks about the difference
between ethical investingand sustainable investing.
And I found that quite usefulcause I had in my mind that
there was potential significantoverlap between them.
And I know that some ESGorganizations or ESG focused
organizations do haveethical thinking in there
(21:14):
sustainability investing.
I did think it was a littlebit different to what
I had expected to see.
Where do you seethe overlap, if any?
Tiina (21:21):
Good question.
So ethical investing, it looksat what you shouldn't invest on.
So it's more about, youknow, banning something.
So I don't want to invest insin stock is quite traditional.
Some investors, they eitherdon't want to invest in tobacco
or gambling and whatnot.
Or if you have a differentreligious background as an
investor, then they could be.
For example, maybe youdon't want to invest in
(21:43):
pork slaughtering or, birthcontrol and et cetera.
So that depends on a set ofbeliefs that the investor has.
And often religiousorganizations, they have sort
of a defined members and theyshare these kind of values and
they can make these kind ofethical investment choices.
So that's where it started.
And that was the sortof the first topic of a
(22:05):
new approach investing.
But nowadays, when you look atESG investing or sustainable
investing, so there's stillkind of this kind of value based
considerations that sometimescome into play, especially
for institution investors.
Tobacco is banned by many,but that's sort of saying that
it's a sin, but thinking moreabout the health consequences
(22:25):
and all of the kinds of causes.
So then it becomes somethingthat you can explain why
it's actually, isn't good.
So it's not more like, likeif you look at alcohol,
for example, they can be.
This kind of use caseswhere it actually, it
doesn't have such a negativeconsequences necessarily.
So, so that's the difference.
And also there's this kindof controversial weapons.
So some investors who aretraditional sustainable
(22:48):
investors, they arestill burning nuclear
weapons, for example, oranti-personnel landmines.
that is an overlap, but then anethical investor might actually
ban all of their weapons.
So there's a bit difference.
And now the new thing is that.
Environmental ideology.
Some of the climatebased considerations,
such as planning, coal.
They started more as an ethicalquestion for some investors.
(23:11):
Now, of course, we seethat there's, the financial
outlook has also changed.
And it's also about riskmanagement and same for
tobacco companies, as well aswe don't really know what's
going to be the growth rateof tobacco users and these
companies in the future, sothey are kind of overlapping.
The value basedconsiderations and then the
sustainability considerations.
(23:31):
So all in all an ethicalinvestors, willing to compromise
profits, do you have thiskind of a sustainability
or value based agenda anda sustainable investor
wants both more sustainablefuture and also good profit.
Yusuf (23:44):
Sustainable investing, focuses on values that
are universal almost.
Whereas ethical investingis usually specific to
individual or group choicesaround whether certain things
can be invested in or not.
Tiina (23:59):
Yeah, I think that's actually really
well put, because yes,it's exactly like that.
So when you look atinternationals, for example,
that's something that companiescan, can agree on that I
don't want child labor orforced labor, et cetera.
So sustainability.
There's often embedded doseAnd also the other thing is
that sustainable investoralso looks at the positive,
where do I want to invest?
Do I want to invest insustainable development
(24:20):
goals and see sort of theopportunities related as well?
So it has a wide range ofstrategies of, screening
the most positive andbest performance and
sustainability choosing aparticular theme, et cetera.
Conor (24:34):
In the book you also mentioned that artificial
intelligence is starting to beused for sustainable investment.
Can you just give us a bit ofan overview about how that's
playing out as you see it?
Tiina (24:44):
There's a couple of European companies, major
pension investors in theNetherlands who have taken
sort of the lead to look atthe sustainable development
goals and screen through a widerange of companies, the whole
investible universe to identifythose that are looking into.
Solving some of the greatestchallenges of today.
(25:05):
And we have a case with, withthem on the book with PGGM
is one of those on ABGs, theother one on how to do that.
And they have actually partneredwith research universities and
they are addressing, I guessthe biggest question now that
you know, something that youhave to work on your own at
the moment to address is like,what is the size of the impact?
(25:27):
Because you can identifythat, okay, this company,
they are solving.
Climate change topics.
They have sustainable energy.
This one is solving watershortages, but are they good
at what they are doing andhow important is their impact?
So that's something thatartificial intelligence has
also helped them lookingat the research data.
Conor (25:46):
Bringing it back for a second, just to internal
audit and the role ofassurance in sustainable
investment going forward.
Where would you seeinternal auditors, for
example, in this space infive years time from now?
Tiina (25:58):
Internal auditor's, it's not something that investors can
easily find out is sustainingpart of the internal audit
or can their company justreport whatever they want and
think it's an advertisement.
And, Also maybe notimplement the good practices
throughout the business.
So I think that's somethingthat's kind can ensure that it's
not just an individual projectthat is sustainable, but the
(26:20):
whole company, as something thatideally companies will report on
what the internal audit covers.
Conor (26:26):
Those companies that are willing to report their
internal audit results ontheir sustainability efforts.
Gives them a competitiveadvantage over other companies,
if they're willing to be thattransparent, potentially.
Tiina (26:37):
Yeah.
Like we have a case witha Finnish forestry company
that in the book thatstoryline, so that's run
into all kinds of sustainableaccusations throughout the
world and , how they gotout of the crisis stronger.
Just started disclosing allkinds of internal research
results and all of that.
So when you are making thiskind of statements that we
found this issue, it doesn'tbecome such a news afterwards.
(26:58):
So if you proactively saythat we have this kind of
a topic, we are addressingit, this is what we are
doing and find it ourselves.
So it's not such a big crisis.
Investors don't like surprises,especially that, this negative
worst that can happen.
Yusuf (27:10):
Yeah and talking about case studies.
Thank you for theearly copy of the book.
It should already be liveor be going live, when
this episode is published.
Lots of really interestingcase studies in there.
So it's not just theory, buta lot of how it's actually
played out in practice.
So, as an internal auditor Idefinitely would be looking at
the book as information to helpunderstand what the landscape
(27:30):
of sustainable investing is.
So, thank you forpulling this together.
I'm sure it's been hugeeffort cause it looks like it.
So Sustainable Investing,Beating The Market with ESG.
If anybody wants to get intouch with you, find out
more about your work, what'sthe best place to find you.
Tiina (27:45):
I'm quite active on LinkedIn and Twitter.
Just shoot me a message thereand I'm happy to discuss it.
There's a lot of thingsgoing on with Australia and
investors and also companiesand even my company has
an office in Australia.
So really good to hearthat you're thinking about
the same topics and we canall learn from each other.
Happy to get some thoughtsand discussions going on.
Yusuf (28:03):
Great.
So that's Tiina Landau.
T I I N A - so that'sdouble I - L A N D A U.
And we'll put a link toyour LinkedIn profile
in the show notes.
Tiina, thanks for joining us.
Tiina (28:12):
Thanks for inviting me.
This was a great discussion.
Narrator (28:15):
If you enjoyed this podcast, please share
with a friend and rateus in your podcast app.
For immediate notificationof new episodes, you can
subscribe at assuranceshow.comThe link is in the show notes.
You're listening to the Assurance Show.
The podcast for performanceauditors and internal auditors
that focuses on data and risk.
Your hosts are ConorMcGarrity and Yusuf Moolla.
Yusuf (00:20):
Today we have Tiina Landau.
Tiina is a sustainability expertbased in Helsinki, Finland.
Hi, Tiina.
Tiina (00:27):
Hi, thanks for inviting me to the show.
Yusuf (00:29):
Do you want to kick off and give us some of your
background and what broughtyou into consulting around
sustainability investing?
Tiina (00:35):
Yes, definitely.
So I have a diverse background.
I've studied business in abusiness school in Finland and I
focused on sustainability there.
During my studies, Itried different kinds of
things in sustainability.
I interned for an NGO andconducted international
projects and developmentaid, and some sustainability
analytics and modeling.
But after studies, I got intoa large Finnish financial group
(00:57):
working in asset management.
So that's when I first gotinto sustainable investing.
At the time we were maybe20 persons active in the
sustainable investing society.
And it was a small group.
So when I told what I wasworking on, it usually there
was kind of a blank face.
Nobody really knewwhat it was about.
It wasn't such a bigtopic then at the time.
After that I worked inmanagement consulting and
(01:18):
I was doing sustainableassurance of companies, also
sustainable strategies andlooking at where companies
should focus and also how thatinformation can be verified.
After that I worked insustainable investing.
I was leading that fora large pension insurer.
And that got me into a lotof starting from scratch,
thinking of first reading thismethodology document, what is
(01:41):
sustainability analytics about.
At the time there wasn't a bookor training that you could take
in order to learn your job.
So I had to learn by practicethat I was asked to analyze
something and then had allof these discussions with
the portfolio managers.
Also, I was preparing thevoting instructions, for
general meetings of companiesand engaging with companies to
pursue sustainability agendas.
(02:02):
So to promote sustainablepractices, both in
Finland and abroad.
In my current job, I am workingat an industrial company,
which focuses on sustainablefuels, and I'm leading
the system de-risk work.
So whenever we have newbusiness initiatives and,
we're looking at supply chains.
So I'm combining sustainabilityrisk information with
(02:23):
mitigation action plans of howwe should address the topics.
Yusuf (02:27):
Why sustainability?
Why is it important to youand what made you decide to
focus on it, so specifically?
And then why is it importantto organizations to understand
what sustainable investing is?
Tiina (02:38):
It's important for both investors at companies.
So, when you look at investors,it's about how to address all
the risks and opportunities,because there's so many topics
when we speak about ESG.
So environmental, social, andgovernance topics, and there's
risks related to all of them.
So a company that doesn'tmanage all of those, they
have more risk compared tocompanies that are actually
(03:00):
looking into topics likeclimate change, water scarcity,
human rights, et cetera.
So legislation pressure, butalso customers and investors
are interested in those.
And sustainable investors wantto make good profit and also
promote a more sustainablefuture at the same time.
And personally, I find that,first it's a meaningful area
(03:20):
to be focused on, but also Ithink it's endlessly interesting
because you have to understandthe big picture of the business
and the environment that allthe businesses are working on.
There's a lot to analyzeand it's complex topics
that are also meaningful,so I find that inspiring.
Conor (03:36):
You mentioned there that you find the whole topic
of ESG endlessly interesting.
And on that point, you'vegot a book coming out.
So what's thetitle of your book?
Tiina (03:45):
"Sustainable Investing, beating the market with ESG."
So we want to explain how youcan do sustainable investing.
And of course, it's alsorelevant for companies to
understand how to analyze, butalso how you can make profit,
while being sustainable.
So basically there's bothof those aspects and it
doesn't mean that allsustainable investing is
profitable, but there areways in which you can do it.
(04:07):
And, here we combine mypractical expertise, so
all the analysis I've doneand engagement of what
works and what makes senseand all the analytics
tools, what is available.
So that the next person doesn'thave to read a hundred piece
of analysis to understand howto get the relevant out of it.
So trying to help the nextperson who's doing that.
And also looking at what arethe key trends in sustainability
(04:30):
that should be focused on.
There's also the secondaspect, I've written it with
an Associate Professor, HannaSilvola, and we've gathered
also the most recent academicresearch to the topic.
So there's a uniquecombination of both aspects.
Conor (04:44):
So as part of your research for the book and
your analysis, did youhave to speak with varied
companies and differentstakeholders and individuals
to get their perspectives?
Tiina (04:54):
Yeah.
So basically there's bothof course my insights of
working years in the fieldand what I've learned.
And then also a lot of casestudies and interviews.
Many of those companiesthat I have been in
co-operation with before.
And I knew that this companyis really good on climate,
this is really gainingsustainable development
goals, this company hastheir fund selection process.
(05:14):
So we wanted to giveexamples that could inspire
anyone to take action.
So good practices and somethingthat if you have limited amount
of resources and a small team,you can still get into it.
And then if you have a bit more,then what you could focus on?
And I wanted to hearthought leaders, what
they thought and inspiredifferent kinds of thinking.
Yusuf (05:35):
There's the word sustainable investing as
you have as the title ofthe book and the topic of
the book, but also there'sa lot of talk about ESG.
So environmental, social,and governance factors.
What's the interplay betweensustainable investing and ESG?
Are they the same thing?
Does one drive the other?
Tiina (05:52):
We use them interchangeably in the book, but
of course, if you speak aboutsustainability and ESG, there's
a bit of different emphasis.
ESG, as you mentioned it,means environmental, social
and governance topics andaddressing them in your
investment decisions.
And of course you cannot treatit all so that you decided,
okay, I'll take the risk.
As long as you areaware of the risks.
So it doesn't make the investingsustainable necessarily.
(06:15):
But then if you speak ofsustainability in general,
it's something that thekind of activities that
are meeting the needs oftoday without compromising
the needs of the future.
So there's this wholesustainability discussion.
So that's more about actionto the right direction and
what the future looks like.
So there's a bit of differentemphasis, but in this kind
of everyday language, theyare often looked at as one.
(06:37):
And also if you look atsustainability, there's a
whole range of topics thatare not maybe covered.
Especially in the governancesection, like often looking
at board composition and thiskind of benefits to board
members and related partytransactions and whatnot.
If you really goto the concepts.
But we didn't want to, we wantedto have practical guidance.
So we are not making thisdistinction in the book.
Conor (06:59):
The whole field of ESG is certainly a topical
area and a growing field.
What would you see, Tiina,as the role of assurance
professionals or internalauditors, in trying to bring
forward ESG views or assistwith ESG activities within
their specific organizations?
Tiina (07:17):
I think it's really key and it's not used
enough as a resource.
I've done both.
I've been doing internalaudit, I've done assurance
and I've also been as asubject to both of those.
When you look at any company,closely enough, there's always
something where they're laggingbehind in sustainability.
And it's a lot better ifyou notice that internally,
than if you wait for someNGO, for example, or some
(07:38):
governmental actors to find it.
And there could be blind spots.
There are many companiesthat do their sustainability
strategies, but is itimplemented everywhere?
Are you looking intoyour supply chains?
Maybe that's the mostobvious place to start.
What about when you're sellingproducts to your customers?
There could be, for example,cases of some communications
equipment sold somewhere,and then used somewhere to
(07:59):
suppress freedom of expressionor something like that.
So there, there can be, it canbe related to a lot of topics.
Then what about when you do M&A.
Is the sustainabilityteam involved when
you're buying companies?
When I was in as an analyst,I noticed the company had
bought parts of a companythat was blacklisted by
many, many investors.
So you really want to besure that you have checked
(08:19):
that you're not buying byaccident, the blacklisted
operations from that company.
Obviously it could be partof your basic legal due
diligence, but not necessarily.
So you need sustainability,where it's material
throughout the operations.
And even if you havea really good team and
they're doing their all.
Even they can benefit.
If the internal auditorgoes directly to the
(08:39):
board and says, wait, thishas to be done faster.
This is where youhave to focus on.
Because often the sustainabilityteam doesn't have that,
direct aspect, of gettingaccess to the highest
level of the organization.
So I think the internal auditorcan push the sustainability
agendas and kind of supportthe internal work that
is already being done.
And even if, you know, mostof them can fail on something.
(09:01):
Like if you look longenough, like and far enough
in the supply chain, forexample, there's always
going to be something.
But if the company is ableto tell that wait, this
is everything we did, thisis what we had in place.
This is our systems and westill have that failure.
So you're in a much betterposition than if you say
that you did nothing.
So I think internal auditdoes definitely have a
role to play in that.
And then about assurance.
(09:22):
I think there's a lotof discussions about the
sustainability numbers.
And there are investors whoare, for example, buying
really sustainable companiesand then shorting those
that are lagging behind.
There was this hedge fundthat told me that they wrote
to one of those companies.
We think you're going to havea flash accident any day.
And this is becauseof your numbers.
And then there is.
No, wait, we did a, youknow, something like tenfold
(09:44):
error in the numbers.
And that's even myself,I found that when asking
about the numbers.
So that's why I thinkit's really good to have
assurance and internal audit.
So what was striking to me isthat when you look at financial
statements, the numbers don'tusually change in the audit,
but with sustainabilitywhen I've done assurance,
I've even changed two-thirdsof the numbers because you
(10:05):
know, there's one personwho could be in the basement
on her own calculating thenumbers, and maybe she put one
subsidiary to the wrong column.
So that's why I think that'sa lot of reasons to do
some kind of checking thatsomebody else is actually
going through all those.
Yusuf (10:20):
Historically, there's been a lot of focus on
financial statement numbers.
And we've got very wellestablished practices
and frameworks andstandards around financial
statement audit numbers.
So making sure the balancesheets, numbers wise,
are correct and incomestatements, et cetera.
What are you seeing in termsof the equivalent external
type assurance, external typeaudit around sustainability,
(10:43):
given its rising importance.
Tiina (10:45):
There's two levels that can be applied.
There's limited andreasonable level of assurance.
And most go with the limitedlevel, at least in the
markets that I'm looking at.
And that means that when, youknow, an auditor says that I
guarantee that everything'scorrect and nothing was omitted.
Then limited assurance,they always often say
that the statement that, Iguarantee there's no reason
to believe that everythingwouldn't be correct.
(11:07):
And so it's sort ofthe opposite way.
So it's a bit less of certainty.
And also the other thing isthat some auditors or assurers,
they look at the numbers andsome also look at the text.
And some look at part of thenumbers or part of the text.
So that's the other thing aswell that you have to focus
like which part is looked at.
And obviously if you lookat the text, you cannot
(11:28):
omit controversies.
But if you don't there'sso often, like when you
look at companies, you goto the financial statements
somewhere in the appendix andyou notice there's been this
huge legal debate and theyare preparing to pay for, for
example, for some corruptioncase, or environmental damage.
And they might omit thatfrom the substantive report.
That's something to focus on.
What is the coverage?
(11:49):
If you have no internalcontrols, then the assurer
can do only so much.
So both focus on what to do.
And even if you have a shares,there's obviously there's still
a lot of room to decide on howto calculate the figures, what
to include, what is the scope?
For example, in Europe, there'sa lot of legislation planning
and the reporting stuff.
So, so let's hope at some pointit becomes more unified, but for
(12:12):
the time being, you also have tohave a bit of flexible approach
when you're looking at thenumbers and even so you cannot
do sustainability analytics,just based on numbers.
Like think of a companythat has had a, really,
a lot of accidents forthe last five years.
Are they going to haveas much accidents for
the next five years?
Not necessarily.
(12:32):
Maybe they have a huge projectto get that to the right track.
So you have to look atthe management as well.
Yusuf (12:40):
If you were an internal auditor within an
organization that hadn'tdone any internal audit work
around sustainability or onESG, where would you start?
And what are the core thingsthat you would focus on?
Tiina (12:50):
I would start where I started as an analyst as well.
I will go to the webpageof the sustainability
accounting standards board.
And they have looked at eachindustry and which topics
are material for each.
So for example, if you'rea construction company,
then you maybe look atthe worker's rights, gray
economy, business ethics.
Is there kind of any corruptioninvolved and supply chains
(13:14):
where the materials comingfrom, if that's in your,
sphere of influence and ifyou have subcontractors.
So the first thing is tolook at what is material
and then go forward fromthere to see where it lies.
And you have to startwith a broad approach
Who is responsible forsustainability and are they
part of the right tables?
So when companies makingdecisions, is it considered
(13:35):
and also when in theoperational level, how is
it implemented in practice?
Conor (13:39):
So one of the themes in your book, the
evolution in the reporting ofsustainability metrics and how
that's changing all the time.
And you just mentioned therethat, certain industries
have material thingsthey need to report on.
I wondered if there's any sortof enforcement for noncompliance
of that reporting, or howdoes that look like when
companies aren't reportingon the metrics that they
(14:00):
should be reporting on?
Tiina (14:02):
Well at the moment, most of it is voluntary.
If you look across all thetopics the standard that is most
common is the global reportinginitiative and their companies
can actually decide themselves.
What is material?
They're supposed to look at thelargest impacts and what are
the stakeholders interestedin, but there is some leeway.
So that's why also thesustainable accounting
standards board comes intoplay because they say these
(14:24):
are material topics, and thisis where you should focus
on, that part is voluntary.
Then there's regionallegislation, for example,
about human rights legislationin Australia, in California,
some European countries, suchas UK and France that are
making some in this one area.
Different kinds of regulationsof what you should report
and what you should doto address human rights.
(14:46):
And then EU has somelegislation about sustainability
reporting as well.
So there are certain topicsthat have to be covered, but
even that is only for largecompanies at the moment.
So there isn't somethingthat covers the whole world
and all of the companies,but we are getting there.
Human rights is that topicthat has first started, but
at least in Europe, it lookslike there will be more
(15:08):
topics that will follow.
Conor (15:10):
Have you encountered where internal audits have
been used to verify, externalreporting on sustainability.
Is that somethingyou've come across?
Tiina (15:20):
I've been the subject of that.
So, so yes, I have comeacross that , but of course
it's usually internalaudit has a wider scope.
So I guess that's actuallya good place for internal
auditor to start if you'redoing your first assignment.
Not just look at what companiesshould be doing, but also about
the reporting, because then youcan ask what's behind that, but
often you also go as an internalauditor because you can also
(15:43):
benchmark against best practice.
So I think that's somethingI would recommend to do.
Because sustainability isabout constant development.
So it's good to say that whatyou're saying externally,
that is accurate, butwhere should you be going?
Are you doing enough?
Yusuf (15:58):
Both external audit and internal audit are often
seen as, not necessarilyinsurance policies, but
a way to assure against.
And then alongside that youwant to potentially have
some insurance in placeto take care of certain
risks that you might face.
In your upcoming book,you have a discussion
around data protectionand information security.
(16:20):
And there's some talk aboutmalware, ransomware, breach
of information, et cetera.
But also around insurance thatyou need to have in place,
and what that covers for you.
What do you think moregenerally about insurance as a
replacement, if you like, forgood risk management around
certain sustainability topics.
Tiina (16:38):
They should be the different lines of defense.
So it shouldn't be the onlyone that is applied insurance.
I guess that's a bit, well,kind of late in the process.
So, and also internal auditthat cannot, you know, you
know, cover like insteadof risk management and
that kind of cover forthe actions that are done.
And of course you need buy-infrom the whole organization.
And can you insure all thesustainability risks today?
(17:00):
Can you, in the future.
There's already caseswhere, for example, we are
speaking about coal miningor areas where there's
climate change impacts and.
for example, they could be toomuch water or too little water.
That's one of them, topicsof climate change can close
with the physical impacts.
So can you insure allthe sustainability risks.
(17:20):
At the moment already,we can see that insurance
companies cannot takewhatever risks that are there.
And maybe if you lookfive or 10 years from
now, is that possible?
So obviously companies canhave insurance policies,
but you also want tomanage the risk and issue.
What is left?
Yusuf (17:35):
Similarly to the way in which you would evaluate
other insurance that you havein place, we need to ask the
questions about is insuranceactually going to make sense?
So if, responsible peopletell you as an internal
auditor that we haveinsurance and, we're covered.
We need to go a bit deeperand say, is the insurance
going to cover us now?
Is it going tocover us in future.
Is there anything we needto think about that may not
(17:56):
be covered by our policies,for example, that could
land us in big trouble.
Tiina (18:00):
Yeah.
Even if it covers,then, you know, they're
still going to be somedisturbance to your business.
So would you really ratherwait for example, at your
factory that lets, theinsurance will cover it.
If I'll have a huge problemor would you rather organize,
your operations in a way thatthere will be no stoppage
of your business in thecase of some, for example,
extreme weather event.
So, so there's only somuch that can be covered
(18:22):
with money, I guess.
Narrator (18:24):
The Assurance Show is produced by Risk Insights.
We work with performanceauditors and internal auditors.
Delivering audits, helpingaudit teams use data
and coaching auditors toimprove their data skills.
You can find out more aboutour work at datainaudit.com.
Now back to the conversation.
Conor (18:44):
You've said in the book, Tiina and I'm paraphrasing here.
So forgive me.
You said ESG ratings canscore, company's governance.
And internal audit andcontrols testing while they
can reveal many issues.
They're not always able todelve into the behavior and
ethical choices of individuals.
Is this something that youthink that internal audit
(19:04):
needs to get better at doing?
Or do you see some limitationson internal audit's role and
sort of trying to understand thebehavior and ethical choices?
Tiina (19:13):
Well, obviously internal audit, cannot
discover everything that'sgoing on at the company.
And often the us is whistleblowing hotlines, for example,
which enables employees,but also the foreigners and
subcontractors to complain of.
So that's also, I guess, roleof learning internal audit
to then research accusations.
Other books that I've readabout how anybody can be a
(19:33):
fraud detective by Nigel Iyer.
And I think that'sreally a good idea that.
If you can get that competencewithin the company, that anybody
can spot red flags, like thebusiness and sustainability,
and the also even if it's notin your personal expertise,
then something that I heardfrom a compliance officer,
for example, if it doesn'tfeel right, it probably isn't.
(19:55):
So that more people learnto trust their guts.
And also when there's somethingthey might not be able to get to
the bottom of it, if you're notreally inside to some kind of
financial numbers, for example,or maybe you don't have access
to the information, maybe it'snot in your role to find it out.
But if you can kind ofspot something and you get
the right, person aware ofthat, for example, through
(20:16):
the whistleblower hotline,then you can detect it.
But it's also about theculture sort of are you making
this kind of rules based, soyou can have a hundred page
manual about what you shouldand shouldn't do, but you can
always find a loophole as well.
If that's the kind of culturethat you're looking at.
As a leader, I guess, whatkind of a company do you
want to establish and areyou teaching people that.
(20:36):
Okay, you have to think ofwhether it's ethical as well and
whether this is right and notjust saying that, is it legal.
If you expect the sustainabilitypolicy to address everything,
then you're always going tofail because you're not going
to know what are all thequestions that somebody is
going to face in the future.
Conor (20:51):
Yep for sure.
Yusuf (20:52):
You've got a specific topic that's fairly early
on in the book, thattalks about the difference
between ethical investingand sustainable investing.
And I found that quite usefulcause I had in my mind that
there was potential significantoverlap between them.
And I know that some ESGorganizations or ESG focused
organizations do haveethical thinking in there
(21:14):
sustainability investing.
I did think it was a littlebit different to what
I had expected to see.
Where do you seethe overlap, if any?
Tiina (21:21):
Good question.
So ethical investing, it looksat what you shouldn't invest on.
So it's more about, youknow, banning something.
So I don't want to invest insin stock is quite traditional.
Some investors, they eitherdon't want to invest in tobacco
or gambling and whatnot.
Or if you have a differentreligious background as an
investor, then they could be.
For example, maybe youdon't want to invest in
(21:43):
pork slaughtering or, birthcontrol and et cetera.
So that depends on a set ofbeliefs that the investor has.
And often religiousorganizations, they have sort
of a defined members and theyshare these kind of values and
they can make these kind ofethical investment choices.
So that's where it started.
And that was the sortof the first topic of a
(22:05):
new approach investing.
But nowadays, when you look atESG investing or sustainable
investing, so there's stillkind of this kind of value based
considerations that sometimescome into play, especially
for institution investors.
Tobacco is banned by many,but that's sort of saying that
it's a sin, but thinking moreabout the health consequences
(22:25):
and all of the kinds of causes.
So then it becomes somethingthat you can explain why
it's actually, isn't good.
So it's not more like, likeif you look at alcohol,
for example, they can be.
This kind of use caseswhere it actually, it
doesn't have such a negativeconsequences necessarily.
So, so that's the difference.
And also there's this kindof controversial weapons.
So some investors who aretraditional sustainable
(22:48):
investors, they arestill burning nuclear
weapons, for example, oranti-personnel landmines.
that is an overlap, but then anethical investor might actually
ban all of their weapons.
So there's a bit difference.
And now the new thing is that.
Environmental ideology.
Some of the climatebased considerations,
such as planning, coal.
They started more as an ethicalquestion for some investors.
(23:11):
Now, of course, we seethat there's, the financial
outlook has also changed.
And it's also about riskmanagement and same for
tobacco companies, as well aswe don't really know what's
going to be the growth rateof tobacco users and these
companies in the future, sothey are kind of overlapping.
The value basedconsiderations and then the
sustainability considerations.
(23:31):
So all in all an ethicalinvestors, willing to compromise
profits, do you have thiskind of a sustainability
or value based agenda anda sustainable investor
wants both more sustainablefuture and also good profit.
Yusuf (23:44):
Sustainable investing, focuses on values that
are universal almost.
Whereas ethical investingis usually specific to
individual or group choicesaround whether certain things
can be invested in or not.
Tiina (23:59):
Yeah, I think that's actually really
well put, because yes,it's exactly like that.
So when you look atinternationals, for example,
that's something that companiescan, can agree on that I
don't want child labor orforced labor, et cetera.
So sustainability.
There's often embedded doseAnd also the other thing is
that sustainable investoralso looks at the positive,
where do I want to invest?
Do I want to invest insustainable development
(24:20):
goals and see sort of theopportunities related as well?
So it has a wide range ofstrategies of, screening
the most positive andbest performance and
sustainability choosing aparticular theme, et cetera.
Conor (24:34):
In the book you also mentioned that artificial
intelligence is starting to beused for sustainable investment.
Can you just give us a bit ofan overview about how that's
playing out as you see it?
Tiina (24:44):
There's a couple of European companies, major
pension investors in theNetherlands who have taken
sort of the lead to look atthe sustainable development
goals and screen through a widerange of companies, the whole
investible universe to identifythose that are looking into.
Solving some of the greatestchallenges of today.
(25:05):
And we have a case with, withthem on the book with PGGM
is one of those on ABGs, theother one on how to do that.
And they have actually partneredwith research universities and
they are addressing, I guessthe biggest question now that
you know, something that youhave to work on your own at
the moment to address is like,what is the size of the impact?
(25:27):
Because you can identifythat, okay, this company,
they are solving.
Climate change topics.
They have sustainable energy.
This one is solving watershortages, but are they good
at what they are doing andhow important is their impact?
So that's something thatartificial intelligence has
also helped them lookingat the research data.
Conor (25:46):
Bringing it back for a second, just to internal
audit and the role ofassurance in sustainable
investment going forward.
Where would you seeinternal auditors, for
example, in this space infive years time from now?
Tiina (25:58):
Internal auditor's, it's not something that investors can
easily find out is sustainingpart of the internal audit
or can their company justreport whatever they want and
think it's an advertisement.
And, Also maybe notimplement the good practices
throughout the business.
So I think that's somethingthat's kind can ensure that it's
not just an individual projectthat is sustainable, but the
(26:20):
whole company, as something thatideally companies will report on
what the internal audit covers.
Conor (26:26):
Those companies that are willing to report their
internal audit results ontheir sustainability efforts.
Gives them a competitiveadvantage over other companies,
if they're willing to be thattransparent, potentially.
Tiina (26:37):
Yeah.
Like we have a case witha Finnish forestry company
that in the book thatstoryline, so that's run
into all kinds of sustainableaccusations throughout the
world and , how they gotout of the crisis stronger.
Just started disclosing allkinds of internal research
results and all of that.
So when you are making thiskind of statements that we
found this issue, it doesn'tbecome such a news afterwards.
(26:58):
So if you proactively saythat we have this kind of
a topic, we are addressingit, this is what we are
doing and find it ourselves.
So it's not such a big crisis.
Investors don't like surprises,especially that, this negative
worst that can happen.
Yusuf (27:10):
Yeah and talking about case studies.
Thank you for theearly copy of the book.
It should already be liveor be going live, when
this episode is published.
Lots of really interestingcase studies in there.
So it's not just theory, buta lot of how it's actually
played out in practice.
So, as an internal auditor Idefinitely would be looking at
the book as information to helpunderstand what the landscape
(27:30):
of sustainable investing is.
So, thank you forpulling this together.
I'm sure it's been hugeeffort cause it looks like it.
So Sustainable Investing,Beating The Market with ESG.
If anybody wants to get intouch with you, find out
more about your work, what'sthe best place to find you.
Tiina (27:45):
I'm quite active on LinkedIn and Twitter.
Just shoot me a message thereand I'm happy to discuss it.
There's a lot of thingsgoing on with Australia and
investors and also companiesand even my company has
an office in Australia.
So really good to hearthat you're thinking about
the same topics and we canall learn from each other.
Happy to get some thoughtsand discussions going on.
Yusuf (28:03):
Great.
So that's Tiina Landau.
T I I N A - so that'sdouble I - L A N D A U.
And we'll put a link toyour LinkedIn profile
in the show notes.
Tiina, thanks for joining us.
Tiina (28:12):
Thanks for inviting me.
This was a great discussion.
Narrator (28:15):
If you enjoyed this podcast, please share
with a friend and rateus in your podcast app.
For immediate notificationof new episodes, you can
subscribe at assuranceshow.comThe link is in the show notes.
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