- Firstly, companies should take the time to refine the Double Materiality Assessment (DMA), aligning with all stakeholders and taking the time to get this right in advance of the CSRD assurance. That might include activities such as an IRO validation and streamlining exercise. It may be that companies pass their DMA outputs through governance channels such as audit committees. Having all of these actions completed will stand companies in really great shape, it might be that once this exercise is completed you may decide to seek assurance or other support over the DMA, to ensure that there is a CSRD aligned DMA which is assurance.
Companies continuing with their DMA will also be in a good position for different reporting requirements through recent enhancements to interoperability. With the CSRD’s DMA and the International Sustainability Standards Board (ISSB) financial materiality aligning to support consistent reporting.
- The second action relates to data and controls. Companies should identify the data they will need to report, start to gather it, and work with all their locations and sites to ensure all stakeholders understand the requirements and the level of evidence needed.
Companies should also take the time to identify where they are heavily relying on estimations and start to move these to actual data where possible. Previously, there was an expectation of a higher proportion of estimations given the timelines required to gather that information, but now with the benefit of a 2 year delay, it is expected that there should be less reliance on estimations and a greater use of primary data.
- Finally, once satisfied with the data, companies should have a third party review it, that might be their internal audit function, or it could be through a completely independent engagement. Leveraging these resources and services will reduce the long-term risks, especially for new data which we have found to be the highest risk for material misstatement, especially where it’s complex and may require either significant interpretations or estimations.
All of these are no-regret actions, which will set companies up for success. Companies should take advantage of the stop the clock and use this time to solidify and control their data to stand them in good stead for their reporting from FY27 or for any company outside of the CSRD scope focusing on data and controls as well as support before disclosing new information will help to derisk their reporting and assurance process.
If you would like to understand how best to take advantage of the pause in the CSRD and want support as you plan for upcoming reporting and assurance requirements, get in touch with our experts Josh Olomolaiye and Tom Arnold to arrange a workshop so we can understand your specific challenges and concerns.
