With the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) in the EU, companies around the world are facing the most stringent ESG disclosure requirements in history. According to EU regulations, starting in 2024, the first batch of large listed companies must prepare sustainability reports in accordance with the ESRS and undergo limited assurance by a third party.
Many Taiwanese companies, even if not directly subject to CSRD, are required to enhance their ESG controls and internal audit standards due to their roles in global supply chains and investor expectations, ensuring data reliability, transparency, and alignment with international norms.
This article summarizes the first wave of practical experiences, explaining how companies can establish ESG control frameworks and audit readiness that comply with CSRD and ESRS requirements.
Many Taiwanese companies, even if not directly subject to CSRD, are required to enhance their ESG controls and internal audit standards due to their roles in global supply chains and investor expectations, ensuring data reliability, transparency, and alignment with international norms.
This article summarizes the first wave of practical experiences, explaining how companies can establish ESG control frameworks and audit readiness that comply with CSRD and ESRS requirements.
1. What CSRD / ESRS Mean for Companies
The CSRD is the EU’s new regulation replacing the existing Non-Financial Reporting Directive (NFRD), significantly expanding the scale, scope, and depth of disclosures. Key changes include:
1.1 Expanded Scope
The number of in-scope companies will grow from around 11,000 to over 50,000 across the EU. It also extends to non-EU supply chains and subsidiaries. If revenue or employee thresholds are met, compliance is required.
1.2 Adoption of ESRS Standards
Companies must disclose ESG information following the ESRS framework, which is more comprehensive and standardized. It includes double materiality assessments, governance structure, strategy, risk management, KPIs, and targets.
1.3 Introduction of Reasonable Assurance
Unlike the previous limited assurance, CSRD requires a gradual shift to reasonable assurance over the next few years—equivalent to the level of verification applied to financial statements.
Image source: FREEPIK
2. Practical Challenges Faced by the First Wave of Companies
Based on the experiences of early adopters, common challenges in implementing CSRD / ESRS include:
2.1 Double Materiality Assessment
Companies must assess both "financial impact on the company" and "the company’s impact on the environment and society." Many struggle with defining boundaries, selecting topics, and engaging stakeholders, often lacking standardized and consistent processes.
2.2 Data Collection and Integration
ESG data is typically scattered across departments, systems, and vendors, with no comprehensive system to consolidate it. Legacy Excel-based manual processes are inadequate for real-time updates and audit requirements.
2.3 Lack of Internal Control Procedures
Many ESG data points lack a “four-eyes principle” review process. There is also insufficient implementation of audit trails and documentation, making it difficult to justify data sources, calculation logic, and decision-making during audits.
3. How to Establish ESG Control and Internal Audit Framework
To meet CSRD / ESRS requirements, companies should progressively build a sustainable and verifiable ESG control and audit system. Below are three recommended steps:
3.1 Build Internal Governance Structure
- Clarify Roles and Responsibilities
Establish a dedicated ESG committee or cross-functional team, assigning specific roles from the board to management and frontline staff. - Integrate into Governance Agenda
Report regularly to the board on sustainability goals, progress, and challenges; incorporate ESG into risk management and strategic planning.
3.2 Standardize Processes and Systems
- Design Data Flow Diagrams
Define the source, calculation logic, reviewers, documentation retention, and audit path for each ESG metric. - Implement Management Systems
Adopt professional ESG data management platforms (such as SaaS tools) to reduce human error and increase efficiency.
3.3 Develop Audit Mechanisms
- Self-Assessment and Internal Audits
Conduct quarterly or semiannual internal testing and validation to ensure data accuracy and logical consistency.
3.4 Prepare for Third-Party Assurance
Ensure all data can be traced back to original documents, formulas, and approval processes, and simulate external audit requirements in advance.
Image source: FREEPIK
4. Practical Recommendations and Future Outlook
4.1 Start Early—Don’t Wait for Legal Mandates
Even if not yet directly subject to CSRD, supply chain pressures and investor expectations have already prompted companies to take early action. It is recommended to begin with existing reporting processes and gradually transition to CSRD-compliant practices.
4.2 Leverage External Resources
Engage consultants to help build frameworks, design workflows, and train teams. Software solutions can also be used to improve data quality and operational efficiency.
4.3 Continuously Optimize
ESG disclosure standards are still evolving. Companies should regularly reassess materiality, update targets, and adjust audit focus areas to continuously meet regulatory and market expectations.
5. Conclusion: Convince the Market with Data and Systems
Under the new CSRD / ESRS landscape, ESG is no longer just a PR slogan—it is now central to corporate governance, internal control, and risk management. By establishing a robust ESG control and internal audit framework, companies can enhance disclosure quality, reduce audit risk, and earn the trust of investors, customers, and regulators—positioning themselves as preferred partners in global supply chains.
Start now by assessing your current practices, designing systems, and developing your team, so that your ESG reports can stand up to the scrutiny of both the market and time.
Start now by assessing your current practices, designing systems, and developing your team, so that your ESG reports can stand up to the scrutiny of both the market and time.
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Hall Chadwick Taiwan has extensive experience in ESG financial consulting and can assist your company in building a sustainability reporting framework that aligns with the latest regulatory requirements.
If you have any questions regarding the 2025 ESG financial disclosure requirements, feel free to contact us.