Decree 2023-1142 of December 6, 2023 2023, has strengthened corporate transparency obligations by progressively replacing the Extra-Financial Performance Statement (DPEF) with the CSRD-derived sustainability report, which is more detailed and more stringent.
The sustainability report from the CSRD (Corporate Sustainability Reporting Directive) must be audited by a statutory auditor or an independent third party (OTI) with the necessary technical skills, such as Houdart Audit et Conseil. The auditor provides limited assurance on its content, which could eventually evolve into reasonable assurance.
The CSRD aims to standardize companies non-financial reporting on sustainable development topics.
Statutory Auditors Authorized to Audit Sustainability Reports
To be listed among the statutory auditors authorized to audit sustainability reports, certain conditions have been established, including being registered as a statutory auditor, passing a specific examination, and continually enhancing sustainability skills through ongoing training.
Houdart Audit et Conseil is authorized to audit and issue opinions on the sustainability reports of companies for which we are the statutory auditor or for which we currently have no mandate.
This reform expands our role and responsibilities, transforming our profession with the emergence of this new mission, which will undoubtedly become a cornerstone of our services to clients. The magnitude of this change, the conviction of its future importance, and the size of the companies whose accounts we certify, some of which are already affected by the DPEF, have prompted us to obtain the necessary authorizations early on.
Myriam de Rouvray is the partner in charge of sustainability matters within our firm.
Our Approach to Sustainability
The implementation of this directive requires companies to accelerate the development of a coherent sustainability policy aligned with European ambitions to achieve carbon neutrality by 2050.
We are convinced that CSRD goes beyond compliance issues and serves as a sustainable performance lever for every organization, and an opportunity to potentially adapt its business model.
However, the depth of this change for the companies involved, which requires genuine cultural adaptation beyond the resources mobilized to deliver the required reports within the given deadlines, necessitates having, more than ever, a constructive relationship with their statutory auditor who will be certifying the sustainability report during the implementation of this process.
As in financial auditing, we rely on the agility of our firm, our ability to master the required technicality, and our capacity to quickly upskill our employees. This enables us to fully support our clients in adapting their processes to the CSRD.
Our close relationships with our customers enable us to discuss on a regular basis how to understand the standards, how to decipher the required indicators, how to effectively produce quality ESG information, and the issues this gradual adaptation raises in terms of management, reporting, internal control and governance.
Our clients are adept at identifying the key performance indicators that need to be implemented to evaluate the effectiveness of actions and objectives, ensuring alignment between strategy and operations.
Companies concerned by the Sustainability Report
Our dedicated blog article details the steps of the gradual implementation of the obligation to establish a sustainability report under the CSRD, the publication modalities, and the importance of the carbon footprint in this process. Companies with more than 500 employees will publish a report in 2025 for the year 2024. The following year, it will be the turn of companies with more than 250 employees, followed by European and non-European SMEs that are listed. Eventually, nearly 50,000 companies will be affected. 2025 will mark a turning point with the full application of the standards, while the compliance period will extend until 2027.
The Auditor’s Support in Implementing the Sustainability Approach
The role of the auditor in supporting affected companies goes far beyond the technical aspect and enhancing its social utility. It is not just a new standard; it is a profound societal change that must be understood in its implementation context.
Our role as auditors is primarily to raise awareness among the affected entities in our portfolio well in advance to inform them and allow them to anticipate the actions needed to publish their sustainability report within the given deadlines and to use it as a transformation lever:
- Conducting a company audit to analyze the scope of the CSRD,
- Raising awareness and mobilizing teams on the CSRD requirements,
- Establishing a materiality matrix based on the principle of double materiality,
- Defining an action plan for CSR to enable the creation of a sustainability report with a realistic timeline,
- Allocating committed internal resources and possibly seeking expert assistance for the development of the sustainability report,
- Requesting assistance from their statutory auditor or an independent organization to define the priority areas for research and analysis within the company,
- Adopting a continuous improvement approach to sustain the effort and gradually refine the content of the sustainability report.
Our Role in Supporting This Cultural Change Focuses on Three Main Aspects :
- Beyond the relatively moderate thresholds that require the publication of this report, the establishment of the sustainability report involves collecting data from suppliers and subcontractors. Every entity in the value chain is important in terms of its ability to collect and rationalize data.
- The concept of double materiality is the foundation of the CSRD, and its understanding must be mastered by the affected entities.
- CSR extends far beyond environmental issues and includes working conditions, business ethics, anti-corruption, and anti-fraud governance.
CSRD, a Transformation Lever
In the immediate term, the priority for newly concerned entities is to implement procedures and tools to collect the required data and complete their first reporting. However, alongside this approach, companies must be able to develop a sustainable, efficient, and reliable reporting solution, similar to what they have done for financial aspects.
To sustainably comply with the new regulations, the concerned entities will need to undergo deeper transformation to adapt their operational model by enhancing their skills, organization, governance, data infrastructure, data collection processes, and information systems.
Their ability to mobilize technological resources to ensure the collection, standardization, and quality of the data required by the CSRD will be a lever for operational efficiency.
This internal transformation, coupled with a coherent sustainability strategy, will serve as a lever for long-term value creation.