Auditing of sustainability data and conflict of interests of Big Four

General
1

CSRD reports need to be audited starting next year. How do you feel about especially the Big Four doing assurance when they themselves are providing competing sustainability services at the same time? I had one assurance meeting today with a Big Four member and one of the auditing party’s specialist was in fact a sustainability consultant. So there they are, asking things about our procedures and ways of working that we would never share with a competitor in any other forum. There should be a clear firewall between their auditors and advisers but clearly that is not the case.

Anyone else experienced this? Have you found ways to deal with the issue? I’m thinking about adding a demand in our contracts that we will only cooperate with auditors if they are not involved in sustainability consultancy themselves.

2

Hi Veikko,

Thanks for sharing this. I share the advocacy for strong walls between the auditors and advisors. Can you specify what you needed to share on your procedures for the limited assurance? That can be a starting point to see how to handle it.

All the best,
Steven

3

Hello Steven! Maybe a bit more background info first. So the assurance was about carbon footprint calculation and climate transition plan. Carbon footprint calculation is pretty straightforward, there’s nothing much about the process, EFs, methods etc. that shouldn’t be public knowledge. What makes me uncomfortable is explaining in detail the process and methods of building a transition plan. Same holds true for other sustainability topics e.g., double materiality assessments. When I think myself on the other side, it would be very interesting to know these details about our competitors and it would help us develop our own methods, formulate better proposals and have an edge in tenders. Of course part of this knowledge is something that will be included in annual reports from now on, but there’s a fine line between public knowledge and business secrets.

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4

Thanks for this clarification Veikko. Just to get it fully right, in Finland the limited assurance auditing for CSRD is allocated to the big four?

5

Not per se. It is stated in the law that the auditing party needs have certain certification regarding sustainability data and that shuts out most of the small players but it’s ont only the big four doing those.