Fatoumata Niakate, Partner at Groupe Audit France, explains the scope of the CSRD and the issues involved

Could you remind us of the institutional framework in which the challenges of sustainability policy for companies are currently taking place?

The general framework is that of the CSRD (Corporative Sustainability Reporting Directive), i.e. the European directive which came into force on 1 January 2008.^er January of this year. The aim is to standardise companies' sustainability reporting, while improving the availability and quality of the ESG (environmental, social and governance) data they are required to publish.  

The CSRD replaces the old framework of the NFRD (Non-Financial Reporting Directive), in force in EU countries since 2018, which in France fell within the scope of the Déclaration de performance extra-financière (DPEF), which collected ESG information.   

What does the CSRD do?

The first practical consequence of the CSRD, from the 2024 financial year, is to broaden the scope of the NFRD. The NFRD applied only to large public interest companies with more than 500 employees, whereas the CSRD applies to companies with more than 250 employees that meet at least one of the following two criteria: €25 million balance sheet or €50 million turnover. The NFRD applied to 11,000 European companies, while the CSRD applies to 50,000 companies and a large number of their subcontractors, since these companies can pass on the CSRD requirements to their subcontractors in order to improve their sustainability performance.

The CSRD also establishes a European framework of common standards, which did not exist in the NFRD. These new standards, or ESRS (European Sustainability Reporting Standards) aim to provide more detailed and demanding information on the data that make up the ESG criteria, as tools for Corporate Social Responsibility (CSR). These data will have to be presented in a sustainability report, on an annual basis.

In everyday language, the terms ESG and CSR are often used interchangeably, but what exactly do they mean?

ESG criteria are used to assess a company's CSR strategy and performance in terms of sustainability, i.e. outside the usual financial indicators. The two concepts therefore refer to the same field: the promotion of sustainable and ethical practices in companies, but from two different and complementary approaches. CSR, as it were, concerns the commitment of companies to a sustainable approach, while ESG deals with the standards that constitute its environmental, social and governance criteria and their impact on the financial value of the company. The auditor's intervention is therefore part of an approach that relates to the evaluation of ESG criteria, but within the general framework of a company's CSR. Consequently, depending on the angle from which we look at the same subject, we can talk about ESG or CSR.

What is the role of the auditor in the new implementation of ESG criteria?

As part of the CSRD, the primary role of audit firms is to certify companies' sustainability reports. To achieve this objective, the Compagnie des Commissaires aux Comptes (CNCC) has launched Visa durabilité, which offers its members a range of training courses on the subject. The sustainability report will be included in the annual management report, in a special section alongside the financial statements. It will also have to be published on the internet. Faced with a new field of competence, the issue of training is crucial. All independent third-party bodies (OTIs) accredited by COFRAC can audit sustainability reports. For statutory auditors, this accreditation does not come through COFRAC but through the training cycle provided by the CNCC, which will have to be accredited by H2A (Haute Autorité de l'Audit), formerly H3C. This training course is open until 1^er It is based on a 90-hour programme of 50 modules, including 43 e-learning modules, covering the 3 ESG criteria.

What assets does Groupe Audit France have to meet the challenge of sustainability?

The first challenge is training. To this end, four Groupe Audit auditors, including myself, have already enrolled in the first CNCC training courses. They will be responsible, under my leadership, for optimising the firm's ESG culture. We are very responsive in this area. Fidurevision, our Grand Est subsidiary based in Mulhouse, has already started to implement a CSR strategy, with a view to developing a client offering that can be rolled out across the whole of the France Group. We can already offer a CSR diagnosis, thanks to a CNCC tool called Diag RSE, which enables statutory auditors or chartered accountants to provide their clients with a diagnosis that defines the scope of a company's CSR activities and the questions they raise. As a result of the training it has received, Groupe Audit France will be included on the H2A accreditation list as of 2 June.^e This will enable it to certify sustainability reports for 2024 from January 2025.

In addition to my Master's degree on the challenges of CSR for SMEs, the certificate I obtained at Dauphine on extra-financial reporting enabled me to apply for the status of COFRAC-accredited ITO, whether you are a statutory auditor, a chartered accountant or simply a consultant.

A recent survey shows that 88% of companies say they are not ready to meet CSRD criteria. What advice can you give your customers and prospects to help them master this issue?

The first piece of advice for the companies concerned concerns the timetable. Companies should not wait until 2025 to address the issue. The CSRD directive comes into force in January 2025, but we must not forget that the sustainability report covers the 2024 financial year. We need to collect the data now, assess its impact and organise its dissemination through reporting.  

This initiative, and this is my second recommendation, requires the advice of a specialist who must help companies to carry out a preliminary assessment of ESG data. It should be noted in this respect that the statutory auditors' mission is said to be "permanent and independent"; this means that the auditors can intervene at all stages of the data collection and procedure analysis process. However, it is important to remember that the statutory auditor, for obvious reasons of conflict of interest, cannot act as both an advisor and an auditor. Consequently, if they are involved in drawing up the sustainability report, they cannot certify it. However, it is still possible to offer a CSR diagnosis, whether the statutory auditor's mission is to advise and support or to audit. The time is now ripe for consulting assignments, and Groupe Audit France is fully mobilised to meet its clients' expectations.