External Auditing for ESRS S1

1. Mandatory Assurance of Sustainability Information

covers topics such as:

  • Diversity and inclusion metrics (e.g., gender pay gap, representation of different demographic groups)
  • Employee health and safety statistics (e.g., workplace accidents, absenteeism)
  • Training and skills development initiatives
  • Employee engagement and well-being surveys

3. Audit Procedures

This involves:

  • Risk assessment related to sustainability disclosures.
  • Examination of evidence supporting the social metrics and data.
  • Interviews and inquiries with management and staff.
  • Comparison of reported data with external benchmarks and industry standards.

2. Scope of the External Audit

The auditor will need to:

  • Verify the accuracy of the social data reported.
    Assess the processes and controls in place for collecting and reporting this data.
  • Evaluate compliance with ESRS S1 guidelines.
  • Ensure transparency in reporting, ensuring that the disclosures are complete and not misleading.

4. Timeline and Phasing-In

  • Large public-interest entities (with over 500 employees) will be the first to comply, with audits required for the fiscal year starting January 1, 2024.
  • Other large companies (meeting two out of three criteria: 250+ employees, €40 million in net turnover, or €20 million in total assets) will follow starting January 1, 2025.
  • Listed SMEs have a delayed timeline, with compliance and auditing requirements starting from January 1, 2026, although they have the option to opt-out for an additional two years.
  • Non-EU companies will be impacted by the CSRD, including the ESRS standards like ESRS S1, starting from 2025 if they meet certain thresholds.

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