In tendering, although being disqualified is a painful experience, it is not the worst consequence. One real issue is the reputational damage that your organization may suffer following disqualification.
The European Union’s Corporate Sustainability Reporting Directive (CSRD) ensures that companies that are obliged to implement environmentally friendly innovations and mitigation measures report these properly, thus avoiding disqualification. If a company fails to report these, then this will become public knowledge.
In this article, we navigate through the complex world of Corporate Sustainability Reporting, and if we interpret CSRD through the ‘carrot and stick’ lens, it’s appropriate to begin with the stick.
Three main penalties in the EU can be applied when organizations fail to report their corporate sustainability.
- The first is public disclosure. Regulators will publish precisely what you got wrong, and this information will not disappear. It will appear in databases, due diligence reports, and Google searches. Every investor and every procurement officer who checks your record will see this.
- The second is cease-and-desist. CRSD can halt your operations until the issue is addressed, and this enforced suspension of activities can be expensive and chaotic, as though you are trying to repair the engine mid-flight.
- And then there are the fines. Big ones. In Germany, this can be up to €10 million or 5% of turnover, while in France, in addition to fines, executives face potential prison sentences. Regulators already know how to enforce these penalties, as they have been applying them for financial audit issues for decades.
Although a fine is unlikely to hamper ambitions and efforts, what is important is the consequences. A public black mark against an organization’s name will be accompanied by exclusion from tenders, investors walking away, and financing suddenly becoming more expensive.
Navigating the verification options
In reality, although compliance support does reduce the burden, it does not remove management’s responsibilities.
Preparation, controls, and evidence may all have been undertaken, but these are not simply tasks to be crossed off the to-do list, they involve consideration of the cost involved in hiring an external auditor.
Although it may be easy to hire someone to delegate these burdensome tasks, and, like the choice of a bid-writing partner, technically anyone qualified can do it, the partnership, timing, responsibility, and cost will differ.
So, the question is, is the cost worth the outcome and the subsequent freeing up of time and resources and the removal of workload?
A statutory auditor or an independent provider?
Under CSRD, there are essentially two options – either use your statutory auditor or engage an Independent Assurance Service Provider (IASP).
The law doesn’t favor one over the other, but both have to meet the same standards under the EU Audit Regulation and the European Sustainability Reporting Standards (ESRS) assurance requirements.
There are three aspects to consider:
- Who is available
- How much will they charge
- How well they already know your business.
A statutory auditor will already know your setup inside out, including internal controls, risk profile, and the quirks in your reporting systems. That knowledge and familiarity with the inner workings can reduce delays and make it easier to align the financial and sustainability audits. For some organizations, this means less duplication and a lighter overall burden.
Independent providers tend to bring much more focused sustainability expertise, which can help with the more challenging aspects, such as aligning with various categories, environmental metrics, and technical screening criteria.
However, it may take more time for them to become acquainted with your operations, and this learning curve may therefore involve a higher cost.
So, the choice is which partner will make the verification process less painful.
Four verification areas that demand attention
CSRD assurance covers four crucial areas, and each requires its own approach. Knowing beforehand what auditors will review helps organizations to build controls into daily operations rather than having to consider these separately at the end of the financial period.
1. Compliance verification
This confirms that disclosures meet the CSRD and the European Sustainability Reporting Standards (ESRS). Auditors will consider whether the double materiality assessment is properly documented and satisfactory. They will also check that the reported information corresponds with the actual impact of your business.
Organizations must keep records of the financial process, including evidence of all stakeholder engagement. Reports must have a clear connection to business activities and operations. Any omissions or incomplete documentation will increase the likelihood of further scrutiny and could prolong the verification timeline.
2. A practical constraint on auditor availability
There are not yet enough trained sustainability assurance auditors, and building that skillset takes time. CSRD adds ESG‑specific competencies on top of financial audit experience, so upskilling can take months rather than weeks, and meanwhile, demand continues to grow faster than capacity. This squeeze is happening in many markets as the first wave of CSRD comes into force.
While a transition period exists, it is limited. Companies in Member States can allow either statutory auditors or accredited independent providers to undertake limited assurance, and an EU limited‑assurance standard is due by 1 October 2026.
In practice, most professionals are hired in good time, so waiting until the year‑end means many organizations face long waiting lists.
Meanwhile, early movers enjoy two benefits:
- Firstly, they can book a slot before peak season.
- Secondly, they can learn what ‘good’ looks like before any checks are undertaken, for example, how sampling will work, what represents sufficient evidence, and how digital mark‑up will be checked.
They can then bake this into the process rather than scrambling to assemble this later.
Late engagement usually means gathering information under pressure, which costs more and invites avoidable mistakes.
Local differences can also be expected. Until the EU standard is established, national authorizations and oversight regimes vary, so what can be expected in one jurisdiction may differ in another.
This is why early contact with an auditor isn’t just about booking a slot, it’s about aligning the proof that each market requires and eliminating any last-minute surprises.
3. Checking the taxonomy
The check for EU taxonomy is the most difficult part of CSRD. It requires technological know-how and clear records that can be tracked.
It is also necessary to demonstrate how turnover, capital expenditure, and operating costs relate to the taxonomy and meet the specific requirements for each task.
Taxonomy-related tasks and alignment are checked by auditors to ensure that the reported turnover is correct. As part of the auditing process, they consider aspects such as environmental limits, and the proof must link to the numbers in the report.
It is not sufficient to be aware of the regulations. Put together an evidence pack that auditors want to see, which should include comprehensive calculations, references to all the criteria, and proof of methods. Without this, the auditing process will take much longer and be more complex.
4. Digital tagging, the technical formality
This checks that the structure and taxonomy choices of your report align with the standard expectations from a technical aspect.
At the draft stage, small mistakes may not seem like a big deal, but once the filing is reviewed, these can lead to questions regarding compliance, require extra rounds of amendments, and the loss of time and thus tend to snowball.
Rigorous checks must be put in place throughout the entire process, from collecting and mapping data to validating this and exporting the information, hopefully long before it is to be submitted during the filing stage.
If you wait until the end of the process to make tagging decisions, mistakes that could have been avoided can potentially become baked in, making the final adjustments both expensive and chaotic.
Instead of viewing the indexing of choices as a last-minute clean-up, this should be considered to be an integral and flowing part of data design and administration.
By allowing plenty of time, teams can:
- Test how well the taxonomy fits
- Make sure they have the right anchors
- Fix any formatting problems before the deadline, which avoids pressure that can lead to unfortunate mistakes.
These necessary controls are as important as the accuracy of the narrative, the data quality, and the timing of the review. If there is a weak link in one area, this usually leads to destabilization in other areas.
In procurement situations, being well-prepared shows the evaluators that you're ready and helps to protect the reputation that matters when bids are very competitive.
A practical setup at the initial stage lowers risk and makes future submissions go more smoothly, with fewer surprises and a clearer review process.
Building lines of defense
The internal control over sustainability reporting (ICSR) framework will need to be as robust as the reporting structure in place for finances.
- Think in three layers and start at the top with governance, because your board and audit committee need clear ownership.
- Then, process the internal controls for how every bit of data is gathered, crunched, and approved.
- Finally, implement tech controls for each of the systems that hold everything together.
The most practical thing to do is to build on existing foundations and integrate this with existing financial controls.
Don't try to invent a separate new system when there are already working, calibrated, and reliable methods available, as this would simply create twice as much work and double the opportunity for something to slip through.
Your ICSR framework is a legal document containing meticulously recorded procedures for each metric, clear data sources, and named ownership for every check so that everyone understands who is responsible for each action.
Care must be taken with estimates and proxies, as compliance teams will look more closely at areas where they have to question assumptions, models, and evidence chains.
There should be a clear audit trail for all data, such as meter readings, invoices, system logs, and supplier verifications, that links each number back to its source.
- If auditors are unable to see where the information comes from to ensure it is complete and traceable, then this may come under further scrutiny.
- Anything missing from the audit trail means that what should have been a simple check becomes a prolonged process of addressing these issues under time pressure.
By putting the internal audit team to work first, they can test the framework before the external auditor begins work so that any weak spots are picked up and dealt with in your time rather than theirs. By finding and addressing these weak spots, their design and operation will withstand subsequent review.
- Send an annual update to the audit committee so any issues are spotted promptly and there is clear ownership across governance, risk, and reporting.
- Plan for a focused on‑site phase that will be followed up, so agree on the scope and evidence required, which will mean that sampling and inspections are quicker.
By engaging the auditor in good time, there will be no surprises, and the documentation and testing will align with what limited assurance actually requires.
Those people who handle the data should be trained about what audit‑ready means including traceable sources, consistent methods, and clear ownership for each step.
Expect some tooling gaps in data extraction and tagging, and address these promptly when there is little pressure, and validation will run smoothly. Treat tagging quality as part ofthe control design because it affects acceptance and comparability once reports are processed and reviewed.
The bottom line
Think of CSRD verification not as a compliance exercise, but as the foundation of your next major tender submission. The organizations that get this right build a solid framework that speaks directly to the evaluators they face.
They see the clear connection between reliable sustainability data and a reputation that wins contracts. This protects access to opportunities before an invitation is even issued.
When the score is close, candidates will stand out if they are perceived as having prepared ahead of time. It is that simple. A disciplined approach to reporting will build credibility that will directly influence success in competitive procurement processes.