In today’s dynamic corporate landscape, an internal audit firm plays a pivotal role in driving sustainable business practices and advancing Environmental, Social, and Governance (ESG) goals. With global stakeholders increasingly focused on non-financial performance, organizations must align their strategy with long-term sustainability imperatives. According to the ESG and Sustainability Advisory Market Size Report 2026, the broader ESG advisory ecosystem was valued at over 47 billion dollars in 2025 and is expected to exceed 85 billion dollars by 2035, reflecting strong growth demand for robust ESG frameworks and assurance services. In regions such as the Middle East, particularly within Advisory Companies in Saudi Arabia, this trend underscores a crucial shift toward embedding sustainability into corporate governance and business strategy.
Internal audit practitioners are no longer confined to traditional compliance functions but have evolved into strategic partners that contribute measurable value to ESG outcomes. This transformation reflects a broader industry understanding that sustainability is not an optional add-on but an integral driver of long-term competitiveness, risk mitigation, and stakeholder trust. Recent data indicates that roughly 76 percent of CEOs in Saudi Arabia report that their sustainability objectives are fully integrated with core business strategy, a rate significantly higher than the global average. For sustainable business transformation to succeed, an internal audit firm must therefore balance assurance and advisory capabilities, working in synergy with business leaders to decode complex ESG risks and opportunities.
This article explores how internal audit functions support sustainable business practices and ESG goals at every stage of the enterprise value chain. It details the mechanisms through which internal auditors add value, from risk assessment and strategic oversight to performance assurance and continuous improvement. By highlighting actionable best practices, quantitative metrics, and real-world trends, we show how internal audit strengthens governance, enhances transparency, and drives measurable progress toward corporate ESG commitments.
The Strategic Evolution of Internal Audit in the ESG Era
Traditionally, internal audit focused on financial accuracy and compliance oversight. However, as corporate sustainability becomes central to organizational success, internal auditors are expanding their remit to encompass ESG matters. A fundamental shift has occurred where internal audit professionals now assess not just financial risk but also sustainability risk, operational resilience, and governance quality across environmental and social dimensions.
From Compliance to Strategic ESG Assurance
Internal audit functions now offer rigorous ESG assurance that validates the credibility of reported metrics. For example, recent industry analyses show that companies leveraging internal audit to oversee ESG frameworks achieve an average improvement of 26 percent in ESG scores. This measurable impact is critical in markets where investors, regulators, and rating agencies increasingly consider ESG performance in capital allocation and valuation decisions.
Bridging ESG Reporting Gaps
Global reporting initiatives such as the Corporate Sustainability Reporting Directive (CSRD) and International Sustainability Standards Board (ISSB) standards have heightened expectations for ESG transparency. Internal audit teams assess the accuracy, relevance, and completeness of ESG disclosures, ensuring organizations deliver stakeholder-grade information. As companies begin CSRD compliance in 2025, internal auditors are expected to review readiness and assurance frameworks to align reporting structures with evolving obligations.
Internal Audit and ESG Risk Management
Risk assessment remains a core function of internal audit, and the expansion into ESG risk management is both natural and impactful. Organizations face emerging sustainability risks such as carbon transition exposure, workforce well-being challenges, regulatory penalties, and supply chain vulnerabilities. A dedicated internal audit approach systematically identifies, quantifies, and helps mitigate these risks.
Materiality Assessments and Stakeholder Prioritization
Internal auditors conduct materiality assessments to determine which ESG issues are most relevant to an organization’s long-term success. These assessments help prioritize actions and allocate resources to areas with the greatest strategic impact for instance, identifying supply chain emissions hotspots or governance weaknesses. By embedding ESG risk into the audit plan, internal auditors align sustainability performance with risk appetite and strategic objectives.
Embedding ESG Controls
Effective internal audit frameworks embed ESG controls into routine risk and compliance processes. From greenhouse gas data validation to workforce diversity tracking, auditors evaluate control environments that ensure accuracy and consistency in ESG metrics. As reported in recent internal audit practice surveys, over 90 percent of chief audit executives recognize the critical need for advanced data analytics in audit functions, though only a fraction currently rate their capabilities as “high or advanced.” This gap highlights the growing importance of technology adoption in ESG assurance.
Driving Governance and Accountability
Without robust governance structures, ESG initiatives risk becoming symbolic rather than transformational. Internal audit strengthens governance by providing independent oversight and objective evaluation of governance processes that underpin sustainability efforts.
Audit Committee Collaboration
Internal auditors work with audit committees and board members to align ESG oversight with strategic expectations. This includes evaluating whether boards possess adequate expertise to challenge sustainability commitments and ensure meaningful progress. Research indicates that strong audit committee expertise positively influences ESG performance and sustainable development outcomes.
Integrating ESG into Enterprise Risk Management
Internal auditors ensure ESG risk is integrated with enterprise risk management (ERM) frameworks. With ESG risk now recognized among top strategic priorities, auditors assess how organizations identify, monitor, and respond to sustainability challenges that could affect long-term value. By embedding ESG into the three lines of defense model, internal audit helps ensure accountability at all levels of governance.
Enhancing ESG Reporting and Assurance
Accurate, credible ESG reporting remains a business imperative in 2025 and beyond. Internal audit’s involvement enhances stakeholder trust by validating reported figures and ensuring compliance with global frameworks.
Validation of ESG Metrics
Internal auditors apply rigorous testing and review processes to verify ESG data, such as emissions, energy efficiency, diversity and inclusion statistics, and social impact initiatives. This strengthens the integrity of sustainability disclosures and supports investor confidence, especially where regulatory scrutiny is intensifying.
Aligning with Global Standards
Auditors help organizations align their ESG reporting with recognized frameworks such as GRI, SASB, and TCFD. Aligning with these frameworks improves comparability, transparency, and accountability, facilitating access to sustainable financing and enhancing reputation.
Internal Audit Technology Trends Powering ESG Assurance
Innovation in audit technology is transforming how internal auditors execute ESG assurance. Digital tools, analytics, and artificial intelligence enhance data collection, processing, and reporting, enabling auditors to deliver more accurate insights.
Advanced Data Analytics
As organizations increase their use of ESG data, audit teams adopt advanced analytics to detect anomalies, measure progress, and forecast outcomes. Despite the high recognition of analytics importance, only a modest share of audit functions report advanced capabilities, underscoring a gap and opportunity for enhancement.
AI in ESG Assurance
Emerging technologies such as generative artificial intelligence help accelerate ESG data analysis, automate repetitive tasks, and identify hidden risk patterns. From predictive analytics to real-time reporting dashboards, technology enables internal audit teams to deliver more granular and timely assurance.
Case Study Insights: Saudi Arabia’s Sustainability Drive
In the Middle East, especially within Advisory Companies in Saudi Arabia, organizations are increasingly embedding internal audit into their ESG strategy as part of national transformation frameworks such as Vision 2030. Recent reports indicate that nearly two-thirds of leading Saudi companies disclosed sustainability practices in 2024, with an increase from previous years — an indicator of rising ESG maturity.
Saudi business leaders report high confidence in meeting evolving ESG regulations and reporting requirements, with 92 percent expressing belief in their ability to comply effectively. This confidence reflects a broad commitment to integrating sustainability at the strategic level and leveraging governance and audit functions to monitor progress rigorously.
Overcoming Challenges in ESG Audit Implementation
Despite widespread adoption, internal audit teams face challenges in scaling ESG assurance. Key issues include inconsistent metrics, talent shortages, and gaps in data integration across business functions.
Standardization of ESG Metrics
One of the biggest challenges for auditors is inconsistent measurement standards across jurisdictions and industries. The ongoing development of unified national ESG guidelines, especially in countries like Saudi Arabia, aims to raise reporting standards and improve comparability across markets.
Talent and Capability Development
Developing internal audit expertise in ESG requires upskilling auditors in sustainability concepts, data analysis, and regulatory frameworks. Organizations must invest in continuous training and talent development to bolster ESG assurance competencies.
The Future of Internal Audit and ESG Integration
As sustainability expectations evolve, internal audit will be central to shaping resilient and innovative organizations. The move toward mandatory ESG assurance in 2026 across GCC markets underscores the increasing importance of auditors in validating sustainability commitments.
By adopting strategic, technology-enabled approaches, internal auditors will continue to guide organizations through complex ESG landscapes, helping translate sustainability ambitions into measurable performance improvements.
The role of an internal audit firm in supporting sustainable business practices and advancing ESG goals is both strategic and measurable. Through comprehensive risk assessment, governance oversight, data validation, and performance assurance, internal auditors help organizations build credibility and resilience in a world where sustainability has become a core business imperative.
For Advisory Companies in Saudi Arabia and global organizations alike, embedding internal audit into the ESG journey unlocks long-term value, enhances stakeholder trust, and strengthens competitive positioning in an increasingly sustainability-driven economy. With latest industry data showing robust growth in ESG advisory services and measurable improvements in ESG scores through audit engagement, the future of internal audit is firmly intertwined with the success of sustainable business transformation.
Finance Advisory 