A government-sponsored enterprise that securitizes mortgage loans in the form of mortgage-backed securities sought to become an Environmental, Social, and Governance (ESG) leader. The client was committed to expanding its ESG performance reporting to external stakeholders and delivering to the Board the following activities:
- Disclose to select ESG Rating agencies (MSCI, Sustainalytics, and ISS).
- Disclose via select ESG reporting frameworks (SASB).
To perform the design and implementation testing of key controls on behalf of management, the client engaged CrossCountry Consulting.
CrossCountry’s cross-functional team of ESG, reporting, and controls experts worked to analyze and optimize the control environment and make strategic recommendations to key process owners.
The review did not seek to challenge the ongoing operating effectiveness of the control. Rather, the design of the control was the chief consideration.
These efforts entailed:
- Detailed control walkthroughs with process owners and control owners for the purpose of identifying controls for testing.
- Obtaining evidence to inform and then conduct design and implementation testing for key controls.
- Completing detailed, shareable workpapers with results and recommendations.
CrossCountry was able to determine whether existing control activity adequately mitigated identifiable risk and whether the control had actually been fully implemented as originally intended. Delivered to the client were:
- A completed test of design and implementation workpapers and conclusions.
- A risk and controls matrix (RCM).
With this analysis, the client was able to understand its current-state ESG controls and pursue control optimizations in the future.