Hamburg, Germany

Impact of the new Corporate Sustainability Reporting Directive (CSRD) on clients and audit firms

By Boris Michels and Kolja Spee, nbs partners

The EU-Commission will require auditors to audit CSR information and to include the results in the audit opinion.

The Corporate Sustainability Reporting Directive proposal (CSRD) published by the EU Commission in April 2021 both increases corporate social reporting (CSR) requirements and extends the circle of companies that are compelled to report. The new requirements apply to all large European companies for financial years beginning 01 January 2023 or during the calendar year 2023. As of 2026, the same reporting requirements will apply to small and medium-sized capital market-oriented companies.

What are the key issues?

Sustainability issues and business strategy

  • Explanation of the robustness of the business model in terms of sustainability risks e.g., rising sea levels or resource scarcity)
  • The firm’s ability to benefit from sustainability initiatives
  • Description of corporate sustainability principles
  • Development and implementation of the sustainability strategy
  • Sustainability goals and appropriateness of the strategy for all stakeholders

Role of management and the supervisory board

  • Internal monitoring of corporate sustainable behaviour at all levels (e.g., sustainability KPIs)
  • Involvement of management (e.g., frequent management reporting)

Corporate actions to enhance sustainability of the entire value chain

  • Description of sustainabilityrelated due diligences
  • Negative implications of the value chain (“Principal Adverse Impacts”) and corporate actions to reduce them (e.g., carbon footprint)

Further information

  • Intangible assets such as human capital or intellectual capital
  • Methods of collecting sustainabilityrelated information

What is important for audit firms?

Audit firms need to gain knowledge on how to review and provide assurance on CSR reports. Many companies will struggle with the new requirements as they have little to no experience in CSR reporting. They are likely to ask their auditors for advice. Consequently, it will be important for auditors and accountants to be prepared in developing, implementing and auditing effective and appropriate sustainability reporting.


 

Boris Michels

Boris Michels

GGI member firm
nbs partners
Auditing & Accounting, Tax, Law Firm Services
Hamburg, Germany
T: +49 40 44 19 60 12
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W: nbs-partners.de

nbs partners is a multidisciplinary association of certified public accountants, lawyers and certified tax advisors, with a focus on the audit and advisory of small, mid-sized and large entities, as well as international groups and high-net-worth individuals.

Boris Michels CPA, CVA, Tax Advisor is Senior Partner in the audit department of nbs partners in Hamburg, and Global Chairperson of the GGI Practice Group Auditing, Reporting and Compliance. With over twenty years’ experience, Boris is responsible for international assignments and quality control.
Kolja Spee

Kolja Spee

GGI member firm
nbs partners
Auditing & Accounting, Tax, Law Firm Services
Hamburg, Germany
T: +49 40 44 19 60 12
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W: nbs-partners.de

Kolja Spee studied Finance & Accounting with strong focus on sustainable Accounting and Corporate Governance at Leuphana University Lüneburg. He is a CSR-Reporting specialist at nbs partners.
 


Published: Auditing, Reporting & Compliance Newsletter, No. 07, Spring 2022 l Photo: powell83 - stock.adobe.com

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