In the European Union, the Corporate Sustainability Reporting Directive (CSRD) is placing sustainability reporting on par with financial reporting. Investors, financial institutions, customers, employees, and other stakeholders will increasingly rely on sustainability disclosures as a key input in decision-making. Consequently, the CSRD has introduced amendments requiring statutory auditors, in addition to performing statutory audits of financial statements, to also carry out assurance engagements on sustainability reporting.

Recently, Croatia, as an EU Member State, transposed the CSRD in its national legislation. The Croatian Audit Chamber (CAC), the professional organization (PAO) representing the audit profession in Croatia, played a critical role in preparing not only our membership, but jurisdictional stakeholders at large, for the implementation of this legislation. CAC benefited from its ongoing monitoring of international developments, exchanges with professional accountancy organizations (PAOs) in other Member States, and participation in other bodies such as IFAC and Accountancy Europe. We were well prepared to contribute to the transposition working groups created by the Ministry of Finance. Our engagement was especially focused on emphasizing the rigorous standards required for sustainability assurance providers to safeguard the public interest and how this would be incorporated from the CSRD to the national Audit Act and Accounting Act. From our experience, we’ve identified three key lessons for other PAOs, particularly smaller ones, implementing the CSRD or similar sustainability legislation.