CSRD Assurance: An Overview of the EU Legislation

Introduction to CSRD Assurance

The Corporate Sustainability Reporting Directive (CSRD) requires assurance, which provides credibility to companies’ reported information. The assurance process can be categorised into two types: limited assurance engagement and reasonable assurance engagement. From the financial year 2024 onwards, companies obligated to comply with the CSRD must provide limited external assurance for all sustainability information. 

Limited Assurance Engagement 

In a limited assurance engagement, the auditor performs fewer tests, and the conclusion is usually provided in a negative form of expression. In practice, the auditor states that material misstatement has yet to be identified in the subject matter. The amount of work for a limited assurance engagement is less than for a reasonable assurance engagement. 

Reasonable Assurance Engagement 

Reasonable assurance engagement entails extensive procedures, including consideration of internal controls of the reporting undertaking and substantive testing. The conclusion of a reasonable assurance engagement is usually provided in a positive form of expression, resulting in providing an opinion on the measurement of the subject matter against previously defined criteria. The amount of work in a reasonable assurance engagement is significantly greater than in a limited assurance engagement. 

EU’s Gradual Approach to CSRD Assurance

The gradual approach from limited assurance engagements to reasonable assurance engagements allows for the progressive development of the assurance market for sustainability information and undertakings’ reporting practices. This gradual approach also phases in the increase in costs for reporting undertakings, given that assurance of sustainability reporting based on a reasonable assurance engagement, is more costly than assurance based on a limited assurance engagement. 

EU Legislation Timeline
October 2026	By October 2026, the EU will set out the procedures that the auditors and audit firms shall perform to draw their conclusions on the Limited Assurance of sustainability reporting, including engagement planning, risk consideration and response to risks, and the type of conclusions to be included in the assurance report on sustainability reporting.  Before October 2026, audit firms should base their assurance on national assurance standards.
October 2028	By October 2028, the EU will provide the Reasonable Assurance standards, following an assessment to determine whether reasonable assurance is feasible for auditors and undertakings.
December 2028	By December 31, 2028, the Commission will review and report on the concentration of the sustainability assurance market, considering national regulations for independent assurance service providers and assessing their impact on opening up the market.

Conclusion on CSRD Assurance

EU law requires a company to verify its sustainability report by an independent third party, and the report must be accessible to the public. 

The sustainability report includes a statement from one or more individuals or authorised firms expressing their opinion on the accuracy of the sustainability reporting. These individuals or firms must be authorised to ensure the accuracy of the sustainability reporting. 

The auditor or audit firm must present the sustainability reporting assurance results in a report that complies with the Commission’s adopted assurance standards or national standards. 

At least one person should be actively involved in ensuring the sustainability reporting’s assurance. The auditor must write an assurance statement including the following information: the auditor’s entity, reporting period, applied framework, the scope of assurance, assurance standards, and the result of assurance. 

How can you benefit from a digital approach?

Ecobio Manager can provide effective platforms for auditors to find all primary and consolidated information, data sources, and calculation principles. Every step of preparing a sustainability statement must be transparent and traceable. Verification increases reliability and reduces greenwashing.  

The EU’s new concept of sustainability reporting will increase the costs of annual management reporting but also benefit businesses. The costs per preparer vary depending on the preparer’s characteristics, such as size and complexity. 

Streamline CSRD Reporting with Ecobio Manager

Ecobio Manager is a thorough solution for CSRD sustainability reporting. It encompasses double materiality assessment, taxonomy classification, data collection, sustainability statement preparation, assurance, and streamlined delivery to publication. Designed by sustainability experts, Ecobio Manager ensures compliance with CSRD and ESRS standards, streamlining the reporting process.