How to effectively prepare for the external assurance requirements under the CSRD
Companies falling under the CSRD regulation need to obtain external assurance for their sustainability statements. Listed companies will already need to comply for the reporting year 2024, while other companies must do so for 2025.
External assurance can be a time-consuming and costly process if not managed effectively. To maximize value from your external assurance while minimizing effort, here are five tips to prepare effectively:
1. Materiality, materiality, materiality
Your double materiality process is a crucial foundation for complying with the CSRD. If you cannot explain and demonstrate how you performed your materiality process, what choices were made, and how you arrived at the results, your external assurance process will experience a false start. Pro tip: file every step of the process to demonstrate compliance with the CSRD requirements regarding double materiality. It may not be your favorite activity, but it’s essential to reach the finish line.
2. Ensure that your reporting structure is solid
Ideally, you’ve designated officers responsible for every data point and established a format for data reporting. Implementing software to facilitate reporting—complete with functions for building a data trail and performing basic controls (e.g., checking historical data and data outliers)—is highly recommended. While Excel can suffice for a first year, we all know how error-prone it can be. And what if Jean, your Excel queen, decides to enjoy a vacation?
3. Make sure you have a reporting manual
Your reporting manual is a key document for both internal and external assurance. It defines the indicators against which data is checked. Additionally, it includes information about the reporting structure, mapping of material topics to KPIs, the reporting calendar, and more. It might not win a Pulitzer Prize, but entering an external assurance process without a reporting manual is like having fries without (vegan) mayonnaise. You get the point…
4. Prepare involved officers
You’ll need to rely on your data reporters to make all of this happen. Gloria, who’s responsible for energy data, and Maximiliano, who handles health and safety data, need clear instructions. How should they report? When do they need to report? What should they file? What checks need to be performed? What can they expect from the external auditor? Train Gloria and Maximiliano before starting the process, and your Friday drinks will remain as jolly as ever!
5. Perform a dry run in the course of 2025
Last, but certainly not least, ensure you’ve performed a dry run of the process before the external auditor starts their work. This can be done by your internal audit department (if you have one) or a temporary team of finance and ESG professionals. A dry run is ideal for spotting weaknesses in reporting, gaps in the data, issues with the audit trail, and other opportunities to enhance your internal reporting.
