CSRD Assurance – What Finance Leaders Need to Know Now

AUTHOR: JENNIFER LOUGHRIDGE

PRINCIPAL CONSULTANT

Jennifer is a Senior Executive Finance professional with 22+ years of global experience. She is a leading expert in Finance Transformation, ESG and Continuous Improvement, with a strong focus on Strategy, Performance Management, Business Partnering, Commercial Decision-Making, Corporate Governance and Valuation.

As the Corporate Sustainability Reporting Directive is coming into effect across the EU, Finance Leaders are finding themselves at the forefront of a new reporting paradigm. Moreover, they also play a crucial role in shaping it. Their decisions and actions will significantly influence how sustainability disclosures are managed and reported. With sustainability disclosures now subject to limited assurance, the Finance function’s rigour beyond financials to ESG data is more critical than ever and often for the first time.

Why Finance Should Care About CSRD

Under CSRD, sustainability reporting is no longer a siloed CSR activity. It has become a core part of external reporting, governed by the same principles of accuracy, auditability, and accountability. Finance teams are uniquely positioned to lead this transformation, but must overcome several assurance-related hurdles. Let’s examine some key takeaways from the 2024 reports, the first to be subject to the CSRD. We will also see what that means for Finance.

Key CSRD Assurance Challenges for Finance Teams

1. Data Quality and Internal Controls

2024 Insight: Many early reporters had not updated their control framework to include internal controls over ESG data. For example, one entity in the banking sector reported financed emissions but couldn’t trace the data back to source systems. This difficulty led to assurance delays.

Finance Implication: As with SOx compliance, ESG data needs processes, controls, documentation, and audit trails. Finance must help design ESG data flows that meet financial reporting standards. This involves establishing clear data collection and reporting processes. It also means documenting the data and process to ensure ESG data can be audited and the data chain is transparent. For most companies, this will also entail automation due to the volume and complexity of the data.

2. Double Materiality and Risk Disclosure

2024 Insight: Several companies struggled to justify their materiality assessments. Some climate-related risks were omitted that were clearly relevant to their business.

Finance Implication: Materiality under the CSRD encompasses both financial and stakeholder impact dimensions. Finance teams must work with sustainability to ensure robust, defensible assessments with the appropriate audit trail. This collaboration is even more crucial because these assessments significantly impact investor disclosures and capital allocation.

3. Standardisation and Comparability

2024 Insight: Reports varied widely in structure and metrics, complicating assurance and peer benchmarking.

Finance Implication: Finance leaders should advocate for standardised KPIs aligned with ESRS and industry standards, particularly when their company has legal entities in many geographies. This standardisation not only eases assurance but also improves comparability for investors, insurers and regulators.

4. CSRD Assurance Readiness and Auditor Coordination

2024 Insight: Many companies significantly underestimated the time and effort needed for assurance. Some annual reports were delayed due to incomplete documentation or late engagement with auditors.

Finance Implication: Treat ESG assurance like a financial audit. Proactive engagement with assurance providers, conducting dry runs, and ensuring ESG data is audit-ready by year-end close are key to being prepared, in control, and ahead of the game.

5. Capacity and Capability Gaps

2024 Insight: Organisations struggled to find ESG-literate auditors or internal staff with the right expertise.

Finance Implication: Upskill finance teams on ESG topics, consider integrated reporting training, and bring in external advisory support where needed; Partner with internal audit and compliance to build cross-functional ESG assurance capacity.

Strategic Takeaways for Finance Leaders

Embed ESG into enterprise risk management and business planning.
Map ESG data flows and apply internal control frameworks (for example, COSO).
Align sustainability and financial reporting calendars to streamline assurance.
Use 2024 reports as benchmarks to identify gaps and best practices

So, What’s Next on CSRD Assurance?

CSRD is not just a compliance exercise, it’s a Finance Transformation opportunity. By applying the same discipline used in financial reporting, finance leaders can elevate ESG disclosures, enhance investor trust and future-proof their organisations, paving the way for a more sustainable and resilient future.

As Finance Leaders navigate the complexities of the CSRD, partnering with Loughridge Transformations can provide the expertise needed to excel in this new environment. Our team specialises in helping organisations integrate sustainability into their financial reporting processes. We ensure robust data management and compliance with CSRD regulations and develop effective assurance strategies.

Why Choose Loughridge Transformations?

Tailored Solutions: We understand that every organisation is unique. Our customised approach to sustainability reporting ensures that we address your specific challenges and opportunities, enabling you to meet both regulatory requirements and stakeholder expectations.
Expert Guidance: Our experienced consultants possess deep knowledge of ESG metrics and reporting requirements. We guide Finance teams through the intricacies of double materiality, data quality, and risks, providing the support needed to make informed decisions.
Cross-Functional Collaboration: We facilitate collaboration between Finance, Sustainability, and other functions, promoting a holistic view of ESG integration. With Loughridge Transformations by your side, you can break down silos and foster a culture of accountability.

Take the first step towards transforming your Finance function into a leader in sustainability reporting. Partner with Loughridge Transformations to turn the challenges of CSRD into opportunities for strategic growth, enhancing investor trust and positioning your organisation for a sustainable future.

Let’s work together to create impactful ESG disclosures that resonate with stakeholders and drive your business forward. Get in touch with us to learn more about how we can work together:

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