3. Limited Assurance vs Reasonable Assurance: Key Differences

4. ESRS Standards: What Must Be Disclosed

The first set of ESRS standards (Commission Delegated Regulation (EU) 2023/2772) covers twelve topical and cross-cutting standards. The three most scrutinised in the first reporting wave are:

• ESRS E1 — Climate Change: Scope 1, 2 and 3 GHG emissions, climate risk and opportunity assessment aligned with TCFD, transition plan disclosures. This is the standard with the highest data-gathering burden for most organisations.
• ESRS S1 — Own Workforce: Headcount by employment type, working conditions, health and safety metrics, collective bargaining coverage, pay gap. The supply chain dimension (S2) is separate but interrelated.
• ESRS G1 — Business Conduct: Anti-corruption policies, lobbying activities, payment practices to suppliers, tax strategy alignment.

All standards are subject to the double materiality assessment: companies must first determine which topics are material to them before deciding which disclosures are required. This assessment itself must be documented and is in scope for assurance.

5. Double Materiality: The Concept Companies Get Wrong Most Often

Double materiality requires companies to assess two distinct perspectives simultaneously:

• Impact materiality: Does the company's activity have a significant actual or potential impact on people or the environment — either positive or negative, short- or long-term? This is an outside-in assessment of the company's effect on the world.
• Financial materiality: Could sustainability-related risks or opportunities affect the company's financial performance, cash flows, access to capital or cost of capital? This is an inside-out assessment of how sustainability factors affect company value.

A topic is material under CSRD if it meets either the impact materiality threshold or the financial materiality threshold. Unlike IFRS S1/S2 (which focus only on financial materiality), CSRD's double materiality approach is broader and more demanding.

EFRAG has published detailed guidance on conducting double materiality assessments, including the requirement to involve internal and external stakeholders, document the process, and explain significant judgements made. This documentation is directly in scope for the assurance provider.

6. Penalties for Non-Compliance: What Is at Stake

The CSRD requires member states to lay down rules on penalties applicable to CSRD infringements and to ensure their implementation. Penalties vary by jurisdiction, but the directive establishes a minimum deterrence framework:

• Financial penalties: up to 10% of annual worldwide turnover for legal persons and up to €5 million for natural persons, under the most stringent national transpositions.
• Public disclosure of infringement: regulators are empowered to publicly name non-compliant entities — reputational risk that many boards consider more damaging than the financial fine.
• Director liability: in several member states, personal liability of board members for sustainability reporting failures is being introduced alongside national CSRD transposition laws.
• Investor consequences: SFDR-compliant fund managers face their own regulatory scrutiny if they rely on CSRD data that subsequently proves inaccurate or unassured.

Spain transposed the CSRD into national law via the Ley de Información no Financiera reform in Q1 2025, with the CNMV as the primary enforcement body for listed companies and the ICAC for statutory auditor oversight.

7. How IgeraRegTech Helps Compliance Teams Navigate CSRD

IgeraRegTech uses Retrieval-Augmented Generation (RAG) to index the full ESRS standard set, EFRAG implementation guidance, the CSRD directive itself, and your company's internal sustainability policies. The result is an AI assistant that can:

• Answer questions about specific ESRS disclosure requirements and cite the exact paragraph reference.
• Cross-check a draft sustainability statement section against the relevant ESRS data point requirements.
• Flag missing disclosures or data points that are required given your double materiality assessment results.
• Generate gap analysis reports showing which ESRS requirements are covered by existing internal policies and which need new documentation.
• Assist assurance providers by giving instant access to the source material behind each disclosure.

8. Frequently Asked Questions on CSRD Assurance

Can a company's existing statutory auditor provide CSRD assurance?

Yes, in most EU member states the statutory auditor is the default assurance provider for CSRD sustainability disclosures, provided they hold the required competence (additional CSRD-specific training is expected). Member states may also allow independent assurance service providers (non-auditors with specific accreditation) to provide limited assurance, though the UK-style separation between audit and assurance is not standard across the EU.

Which ESRS standards are mandatory versus voluntary?

All twelve ESRS in the first delegated regulation are potentially applicable, but they are subject to the double materiality assessment. If a topic is not material under your DMA, you may omit the related disclosures — but you must explain this omission. A small number of data points are mandatory regardless of materiality (e.g., general disclosures in ESRS 2 on governance, strategy and risk management).

Is Scope 3 reporting mandatory from day one?

ESRS E1 requires Scope 3 reporting, but a one-year phase-in is available: companies may omit Scope 3 data in their first CSRD report provided they disclose the reasons for the omission and the timeline for inclusion. However, many large PIEs were already reporting Scope 3 voluntarily under TCFD frameworks, so the omission option is primarily relevant for Wave 2 and Wave 3 entities.

What does the CSRD mean for non-EU companies operating in Europe?

Non-EU parent companies with combined EU net turnover exceeding €150 million and at least one EU subsidiary or branch above certain thresholds are in scope for a proportionate CSRD obligation from FY2026. These companies must prepare a sustainability report covering their EU operations, assurable under a standard equivalent to ESRS (or ESRS itself). The Commission has issued a separate delegated act for this third-country entity reporting standard.

How does the CSRD relate to the EU Taxonomy Regulation?

EU Taxonomy disclosures (aligned and eligible economic activities as a percentage of turnover, capex and opex) are required under the Taxonomy Regulation (EU) 2020/852 and must be included in the sustainability statement prepared under CSRD. They are covered by the same assurance engagement, meaning the assurance provider must also review the taxonomy alignment methodology and calculations.

Will the CSRD be affected by potential EU deregulation in 2026?

The EU Commission's Omnibus Package (February 2025) proposed reducing the scope of CSRD by raising employee thresholds, potentially cutting in-scope companies from ~50,000 to ~25,000. However, as of June 2026, the Omnibus Package is still in trilogues and no formal amendments to Directive 2022/2464 have been published. Companies in scope under the current directive should continue preparing; the scope narrowing, if adopted, would mainly affect Wave 2 and 3 entities.