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Exploring critical questions in CSRD Assurance for professional service firms


Published: 16 Nov 2023

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Polly Tsang, Financial Services Manager explores some of the issues Professional Services Firms need to be thinking about now with the introduction of the Corporate Sustainability Directive (CSRD) in 2025.

The Corporate Sustainability Reporting Directive (CSRD) expands non-financial reporting obligations for impacted entities beyond those set out in the Non-Financial Reporting Directive (NFRD) and is expected to impact on more than 50,000 companies.

Many EU registered businesses will be caught directly and have to comply with its non-financial reporting requirements and UK businesses with European parent companies might be asked to report more non-financial data upwards within their group structure.

This directive, effective in stages as early as 2025, for financial years beginning on or after 1 January 2024 for large EU and non-EU entities , along with EU-regulated market-listed groups exceeding 500 employees, represents a watershed moment.

CSRD applies to any non-EU entity that has equity or certain debt securities listed on EU-regulated markets, except for micro companies (companies with less than 10 employees and revenue or total assets below €2 million).

What is CRSD? 

CSRD is a cornerstone of the European Green Deal – a package of policy initiatives, which aims to set the EU on the path to a green transition, with the ultimate goal of reaching climate neutrality by 2050. 

The directive sets its sights on elevating the quality and accessibility of sustainability information that companies produce and report, fostering a culture of transparency regarding companies' societal and environmental impacts. 

In-scope firms will need to adhere to European Sustainability Reporting Standards (ESRS), of which there are a number: 

Cross-cutting standards 

  • ESRS 1 General requirements; and
  • ESRS 2 General disclosures


  • ESRS E1 Climate Change; 
  • ESRS E2 Pollution; 
  • ESRS E3 Water and marine resources; 
  • ESRS E4 Biodiversity and ecosystems; and
  • ESRS E5 Resource use and circular economy


  • ESRS S1 Own workforce; 
  • ESRS S2 Workers in the value chain; 
  • ESRS S3 Affected communities; and
  • ESRS S4 Consumers and end-users


  • ESRS G1 Business conduct

Double materiality

ESRS requires employing a "double materiality" approach to address a wide spectrum of sustainability issues, as listed above. 

The ESRS breaks double materiality into two categories:

1. Impact materiality (the “inside-out” perspective)
2. Financial materiality (the “outside-in” perspective)

The Inside-Out perspective requires companies to identify the actual and potential positive and negative impacts of their business activities on various sustainability topics.

The Outside-In perspective (financial materiality) examines the opportunities and risks of sustainability topics for a company’s financial position and the future viability of its business model.

A topic is subject to reporting obligations if it is classified as material from the perspective of either of the two perspectives. 

CSRD amendments to existing framework

CSRD amends Article 34, paragraph 1, of Directive 2013/24/EU. This includes a new requirement as follows: 

Where applicable, express an opinion based on a limited assurance engagement as regards the compliance of this Directive, including the compliance of the sustainability reporting with the:

  • sustainability reporting standards adopted pursuant to Article 29b or Article 29c…
  • the process carried out by the undertaking to identify the information reported pursuant to those sustainability reporting standards… 
  • and the compliance to mark up sustainability reporting in accordance with Article 29d,…
  • and as regards the compliance with the reporting requirements provided for in Article 8 of Regulation (EU) 2020/852…

Issues for professional services firms to consider now

With mandatory assurance requirements taking effect right from the outset, professional services firms will need to be ready to take on the approximately 50,000 firms who find themselves in scope for CSRD.

As professional service firms grapple with this evolving landscape, they find themselves at a crossroads, faced with critical questions and decisions that will shape their role in ensuring transparency and accountability in sustainability reporting. We have identified some of the key ones below: 

1. Number and Type of Reports: A Balancing Act

One of the pivotal questions that professional service firms are deliberating on is the number and type of reports they should produce under CSRD. Should it be a single comprehensive report, a mix of reports, or a more streamlined approach? Each option has its pros and cons. While a single comprehensive report may provide a holistic view, it could also become overwhelming. A mix of reports may offer flexibility but could create confusion. Key considerations include the audience's needs, the organization's complexity, and the regulatory requirements.

2. Double Materiality: Process vs. Output Assurance

The concept of double materiality is a cornerstone of CSRD, and professional service firms are wrestling with the decision of process assurance versus output assurance. Many firms lean towards process assurance, emphasizing the importance of robust internal mechanisms for assessing and reporting sustainability. However, unanimity within the industry is yet to be achieved. Furthermore, if assurance providers qualify on the double materiality process, should they also qualify on the remaining three assurance aspects, given their interconnected nature? This is another question that demands clarity.

3. Engagement Take On: Balancing Scope Limitations

Standards currently stipulate that assurance providers cannot accept engagements if they anticipate scope limitations that might lead to a disclaimer opinion. The industry is in deliberation on whether this rule should remain intact. If it does, what additional considerations need to be factored in under International Standard on Assurance Engagements (ISSA) 5000, and how should these limitations be communicated with management? The practical implications of this decision are significant and need thorough exploration.

4. Eligible Criteria for CSRD: Reassessing the Relevance

Do the CSRD and the European Single Electronic Format Reporting System (ESRS) inherently meet the eligibility criteria to be able to provide assurance? This viewpoint raises questions about the need for reassessment under each engagement. Professional service firms need to collectively decide if this perspective holds water.

5. Readiness Assessments: Preparing for CSRD Assurance

CSRD is set to be a game changer for professional services firms in terms of resources and work required and firms should focus on how they approach planning, execution, and output in assessing assurance readiness. 

6. Other Considerations: AAP and User Expectations

In addition to the above questions, professional service firms should examine what the Assurance on Assurance Process (AAP) would require firms to set out under each assurance report and whether the CSRD debate on four reports versus one would influence this area. 

Lastly, firms should be seeking insights into the expectations of users. What do stakeholders expect from sustainability reporting—should it be four reports or one, and how can firms ensure that these reports are understandable and valuable to their intended audience?

CSRD – the journey continues

In conclusion, the CSRD landscape is replete with complex questions that demand careful consideration and industry-wide consensus. As professional service firms navigate this evolving terrain, their insights and decisions will play a pivotal role in shaping the future of sustainability reporting and accountability. Collaboration and thoughtful deliberation will be key as we embark on this transformative journey towards a more sustainable future. 

ICAEW provides the opportunity for professional services firms to come together and will be providing further guidance on this matter in consultation with its member firms.