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Forvis Mazars Group SC

Forvis Mazars Group is a leading international audit, tax and advisory firm, aspiring to build the economic foundations of a fair and prosperous world.

Lobbying Activity

Response to EU taxonomy - Review of the environmental delegated act

5 Dec 2025

Forvis Mazars is a leading international audit and assurance, tax and advisory firm of 40,000 professionals, in more than 100 countries. We pride ourselves on being a different kind of firm one that contributes to a fair and prosperous world by caring for the success of our people and clients, the health of financial markets, and the integrity of our profession. This is why we never miss an opportunity to contribute our knowledge and expertise to the regulatory and public policy issues affecting auditing and corporate reporting around the world. We fully support timely and significant modifications aiming at making the European Taxonomy Regulation more useful and less complex to implement. Although complete taxonomy information has only recently been published, the implementation of this regulation has highlighted many challenges that the EC should address. Before answering to the calls for evidence for the review of the Climate and Environmental Delegated Acts, we would like to highlight one important high-level matter regarding the consistency of the EU Taxonomy reporting requirements and the ESRS requirements, as both set of information have to be presented within the sustainability statement prepared in accordance with the CSRD. The sustainability statement indeed includes ESRS information that is standardised by the EC with the help of EFRAG, but also EU Taxonomy disclosures that are defined by the EC with the support of the Platform on Sustainable Finance. Currently, both reporting frameworks are independent overall, therefore we encourage the EC to identify points of convergence as much as possible to further reduce complexity for companies. We also note that numerous FAQs issued by the European Commission were necessary to specify some criteria currently listed in the Delegated Acts. Although we recognize the value-added of the FAQs, we believe they are too numerous and sometimes contradictory. Clear technical screening criteria which would need less ad-hoc clarification would ease the use and application of both the Climate and Environmental Delegated Acts and would improve comparability of reported taxonomy-aligned KPIs. When revising the technical screening criteria, we strongly recommend that welcome clarifications brought by the FAQs be directly incorporated into the technical screening criteria wording of the new Delegated Acts. With respect to the calls for evidence, we would like to raise the following points as a priority: - General complexity of the technical screening criteria - Simplification of the generic criteria for DNSH to Pollution (Appendix C) - Clarification of the requirements of the generic criteria for DNSH to Water (Appendix B) - Harmonization of Climate Risk Assessment required by, on the one hand, the generic criteria for DNSH to Adaptation (Appendix A) and the substantial contribution to the objective of Climate Change Adaptation and, on the other hand, the ESRS - Simplification of the criteria specific to real estate activities for DNSH to Water - Clarification of the wording of some criteria for DNSH to Circular Economy - Clarification of the generic criteria for DNSH to Biodiversity (Appendix D) - Simplification and specification of the criteria which refer to European regulations or directives, when assessing activities carried out outside of the European Union - Simplification of the specific criteria for activities CCM 6.3 and CCM 6.5 for DNSH to Pollution - Clarification of the LCA approach: Substantial life cycle GHG emission savings - Inclusion of component level consideration and definition of equipment - Alignment of the scope of activity CE 1.2 Manufacture of electrical and electronic equipment with its technical screening criteria You will find attached a selection of technical screening criteria and topics which we believe are particularly burdensome or complex and should be revised as a priority.
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Response to Digital package – digital omnibus

14 Oct 2025

Forvis Mazars is a global firm born in the European Union: we deliver audit & assurance, tax, advisory and consulting services in 26 Member States and over 100 countries and territories. As a professional services firm that assists clients with implementing digital and IT regulations and requirements related to AI systems and cybersecurity challenges, we welcome the opportunity to provide evidence to support the smooth application of the AI Act rules, the Apply AI strategy, including by ensuring the optimal application of the Artificial Intelligence Act, and the initiative to revise the Cybersecurity regulatory framework. As a leading professional services firm with deep expertise in cybersecurity, risk management, and regulatory compliance across the European Union, we are committed to supporting the development of robust, harmonised AI and cyber risk frameworks. Our response draws upon practical experience advising public and private sector organisations on cyber resilience, and governance (including the provision of third-party cyber security assurance), and reflects our dedication to safeguarding the digital ecosystem. Please find attached details on our recommendations, with a focus on: The AI Act: - Optimal Application of the Rules : a clarification of risk classification criteria, including the operationalisation of the principle of AI impact, as well as enabling proportional compliance for smaller firms is essential to avoid over-compliance and stifling innovation. - Legal Predictability: The optimal application of AI rules should be accompanied by a high degree of legal predictability, enabling organisations to plan, develop and invest with certainty and confidence. Legal predictability requires clear, stable, and harmonised interpretations of obligations across all Member States, avoiding fragmented enforcement that generates uncertainty and compliance risk. Cyber Security Clarifying the Mandate of ENISA Positioning third party assurance within the broader EU legal framework Improving the European Cybersecurity Certification Framework Achieving Better Resilience
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Meeting with Sven Gentner (Head of Unit Financial Stability, Financial Services and Capital Markets Union)

24 Sept 2025 · Announced changes to audit supervision

Response to Gender Equality Strategy 2026-2030

1 Aug 2025

Forvis Mazars welcomes the Commissions renewal of the EU Gender Equality Strategy for 20262030 and supports its ambition to foster measurable, systemic and accountable progress in gender equality across sectors. We would like to support and contribute to the EU equality agenda by sharing our expertise and practical experience. Our contributions cover governance, strategy, and practice, combining data-driven assessments, gender KPIs and operational implementation. They could serve as a benchmark for advancing collaboration between the EU institutions and private sector. As a global professional services firm with strong European roots and operations in 26 EU Member States, we recognise gender equality as both a fundamental right and a driver of social and economic resilience. Drawing on our experience to advance human rights and gender equity in the workplace, we are happy to share our feedback and practical insights to promote structural and organisational change: 1. Consolidate EU-level guidance on gender pay gap analysis: Many companies, including Forvis Mazars, have benefited from enhanced clarity on pay transparency obligations. To build on this progress, the EU could offer voluntary toolkits and methodologies to harmonise reporting across Member States. This approach would streamline legal processes while preserving national-level flexibility. 2. Support inclusive recruitment and early-career retention: Entry-level bias and pipeline attrition remain widespread issues. The Commission could support knowledge exchange across Member States by encouraging national-level and sector-specific guidance on inclusive job descriptions, structured interviews, and early-career mentoring through national and sectoral initiatives. These tools have proven effective in addressing bias in gender-imbalanced industries and could be adapted to reflect diverse cultural and operational contexts. 3. Elevate structural enablers such as flexible working and workplace well-being: The Work-Life Balance Directive has established a fundamental framework. In the future, the EU could take action to ensure its proper implementation across the Member States and encourage large multinational companies operating across Member States to share experiences. This would help to incentivise good practices in flexibility, care responsibility and well-being support. Over the past five years, Forvis Mazars has embedded gender KPIs in executive performance systems, launched a CEO checklist as a diagnostic tool across 35+ countries (including 15 EU Member States), and implemented a decentralised model of country and regional DEI dialogues to localise action and ensure mutual accountability. To support this contribution, we have attached a full paper detailing our internal model across four pillars: (1) measurable gender KPIs; (2) governance and ownership; (3) lifecycle-based equality practices; (4) transferable tools and monitoring systems. These experiences may offer useful insights for the Strategys future governance infrastructure, private sector mobilisation, and implementation support across Member States. We remain firmly committed to further collaboration and thank the Commission for the opportunity to contribute.
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Response to Revision of EU rules on sustainable finance disclosure

28 May 2025

As a professional services firm that assists clients with implementing the SFDR, we welcome the opportunity to respond to the Call for Evidence launched by the European Commission to review EU rules on sustainable finance disclosure. In line with the objectives of the Commissions SFDR review (to improve the functioning of the SFDR and address undue burdens and simplify requirements) please find below a number of observations from our SFDR work with clients. (I) Observations from our SFDR work 1. Complexity and changes create regulatory burdens o The SFDR regulation and RTS are complex and detailed in some areas but then ambiguous in other areas. Examples are a lack of a clear definition of "sustainable investment" and inconsistent calculations of Principal Adverse Impacts (PAIs) indicators. This leads to differing interpretations and outcomes making it difficult for end-users to compare products. o Changes to the RTS are still being implemented, which leaves the client in a constant loop of revisions. 2. Data cost, availability and comparability o Smaller entities struggle to access ESG data. o Multiple data providers are needed to complete the reporting requirements, making the process costly and inefficient. o ESG ratings can be of poor quality, not benchmarked, and based on opaque methodologies, making it costly and unreliable information. Furthermore, "Cherry-picking" favorable ESG raters leads to inconsistencies and accountability issues. 3. PAIs Assessment o The assessment of PAIs is complex and unclear, particularly the "look-through" methodology. This complexity makes it difficult for firms to accurately assess and report PAIs. 4. Articles 6, 8 and 9 the benefits versus the costs o The complexity, number of data points, and proof required for achieving an Article 9 classification often outweighs the benefits of having Article 9 status, compared to Article 6 products. Consequently, companies can prefer to report Article 8 and Article 9 products as Article 6 to avoid these costs and challenges. 5. The Issuance and periodic templates o Completing the issuance and periodic templates is particularly challenging due to the need for measurable KPIs and data points, which are often unavailable. The lack of concrete data points makes compliance difficult and time-consuming. (II) Some policy considerations for the revised SFDR In light of our observations and experience of the SFDR, below are some policy considerations for the revised SFDR. Ensure that the revised rules are simper and clearer to navigate for all participants in the sustainable finance ecosystem (e.g. prepares, advisers and end-users) so that the ultimate aim of informing consumers on what products are considered sustainable investments can be achieved. There are several system-level challenges associated with sustainability data (e.g. cost, availability, reliability, transparency and comparability) which need to be tackled. These challenges have consequential impacts for the cost of complying with the SFDR and the accuracy of disclosures (which in turn hampers investor confidence). Given the intertwined relationships between numerous EU sustainability regulations (SFDR, CSRD, Taxonomy, CSDDD and ESG ratings) and the ongoing EU Omnibus discussions (which will have consequential impacts for the number of data points to be reported) proposed changes to data requirements in any of the EU sustainability regulations should consider if those changes have unintended consequences for data cost, availability, reliability and transparency in another sustainability regulation. Furthermore, strengthening transparency and consistency in ESG ratings and performing independent ESG ratings benchmark assessments can improve the reliability, transparency and comparability for what is an important source of ESG information. The ESG Ratings Regulation (2024) and ESMAs consultation on Technical Standards should contribute positively to ESG ecosystem functioning.
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Meeting with Arthur Corbin (Cabinet of Executive Vice-President Stéphane Séjourné), Vincent Hurkens (Cabinet of Executive Vice-President Stéphane Séjourné)

27 May 2025 · Omnibus - Regulatory landscape

Meeting with Martin Merlin (Director Financial Stability, Financial Services and Capital Markets Union)

26 May 2025 · Developments in the audit market

Response to Taxonomy Delegated Acts – amendments to make reporting simpler and more cost-effective for companies

26 Mar 2025

Forvis Mazars, the leading international audit and assurance, tax and advisory firm of 40,000 professionals, in more than 100 countries, welcome the adoption of the 1st Omnibus package and proposals aimed at simplifying EU Taxonomy Regulation. We fully support rapid and significant modifications intended to make this regulation more useful and less complex to implement. So far, the Taxonomy implementation has highlighted many challenges to address. From our experience as auditors, we saw many companies struggling to apply the current texts. In practice, existing Taxonomy reporting requirements are very burdensome, whereas the benefits derived from them are not sufficiently clear. We appreciate that the Omnibus proposals are a welcome starting point for companies and suggest additional steps to go even further: We acknowledge the crucial need to introduce an exemption from the obligation to report based on materiality, but we question the relevance of introducing a fixed materiality threshold, since companies and their auditors are used to applying the principle of materiality taking into consideration both qualitative and quantitative factors. Should the EC maintain its proposal, we believe that it needs to be significantly clarified. We highly recommend deleting the requirement to report on the OpEx KPI, considering the complexity related to its computation and the lack of usefulness of this indicator. We believe that the reporting on individually eligible/aligned CapEx should be made optional. The same recommendation applies to individually eligible/aligned OpEx should the EC does not retain our proposal to delete the OpEx KPI. Although we welcome the amendments with respect to Appendix C, they are not sufficient to significantly reduce the reporting burden associated with the generic DNSH criteria on pollution. We believe that the requirements should be more closely aligned with European legislation and that Taxonomy Regulations DNSH criteria should not be more demanding than the underlying environmental regulations. With respect to credit institutions, we believe the structural asymmetry between the numerator and the denominator of the GAR should be addressed in a broader way. We also recommend deleting the requirement to disclose the trading book and the fees and commissions KPIs. We welcome the simplifications proposed to the reporting templates, even though we believe that some clarifications are needed in some respects and further simplifications should be considered regarding the templates for financial companies. We advocate for the deletion of all templates on nuclear and fossil gas activities for all companies regardless of the business sectors in which they operate. We encourage the EC to move forward quickly to propose further simplifications with respect to the technical screening criteria and the presentation of disclosed information to make the Taxonomy regulation relevant and useful to all. An improved integration of the Taxonomy and the reinforcement of its consistency with other regulations will be instrumental to its development and acceptation. Besides, the introduction of the partial alignment concept in the context of the optional regime proposed by the draft Content Directive raises many questions. We encourage the EC to maintain a single simplified Taxonomy reporting framework applicable in the same way by all companies i.e. those subject to Taxonomy reporting and those willing to report Taxonomy information on a voluntary basis, depending on the implementation scope to be defined by co-legislators. This will ensure comparability and will avoid creating confusion by reporting different level of Taxonomy-related information. Beyond amending the Taxonomy Regulation to make it simpler and more cost-effective, we believe that the EC should also review the due process applied to this regulation to make it more robust and more transparent. Please find attached our detailed comments.
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Meeting with Anne Schaedle (Head of Unit Financial Stability, Financial Services and Capital Markets Union)

20 Feb 2025 · Supervision of capital markets

Meeting with Cristina Dias (Cabinet of Commissioner Maria Luís Albuquerque)

7 Feb 2025 · Introductory meeting to discuss upcoming developments

Meeting with Lara Wolters (Member of the European Parliament)

18 Nov 2024 · Audit Policy

Meeting with Eero Heinäluoma (Member of the European Parliament)

1 Oct 2024 · Current Affairs

Meeting with Pascal Canfin (Member of the European Parliament)

3 Nov 2023 · Green Deal

Response to European Sustainability Reporting Standards

7 Jul 2023

Mazars welcomes the draft DA on the proposed ESRS released on 9 June 2023 and the consultation on the first set of standards. We applaud the huge amount of work that has been done within a very short period of time by the EC and EFRAG. We believe an appropriate balance should be struck between (i) the need to meet CSRD's ambition as regards the broad coverage of ESG matters to be addressed by the ESRS and (ii) the challenge to avoid adding too much to companies' reporting burden. In our opinion, the ESRS should be structured to be scalable for all types of companies and to meet the needs of all users of sustainability statements. While the core of EFRAG's work has been preserved, acknowledging that EFRAG's proposals had been streamlined compared to the Exposure Drafts, flexibilities have been added in certain disclosures in such a way that they help to remove unnecessary complexity and granularity in applying ESRS (notably ESRS E4 on biodiversity and ESRS S1 on own workforce), especially in the first years of application and for the smallest companies (with additional phase-in measures). However, we caution that reporting under these new standards and providing the high quality of information that stakeholders expect will be a real challenge for the undertakings that will have to comply with the ESRS as soon as 1 January 2024. Support for the double materiality approach and need for additional guidance: We commend that materiality assessment is the starting point for sustainability reporting under the double materiality perspective with only the DRs in ESRS 2 being mandatory. Identifying material ESG matters will require additional efforts and time, but, if properly done, it will ensure that the information presented does not obscure relevant and material information. The forthcoming guidance from EFRAG on this key process will be critical to ensure consistent application of the ESRS. Assurance providers will play a key role when presenting their conclusions on the process carried out to identify the information to be reported in accordance with these standards. Concern over the non-alignment of EU regulation on materiality of information: Given the extended scope of the materiality assessment, a major concern refers to the lack of coherence between ESRS and other EU legislation, notably SFDR. Since datapoints in the ESRS that emanate from other EU law are no longer mandatory, the related information will be provided only if it is material for the undertaking, whereas financial market participants need this information to meet their reporting requirements under the SFDR. Hence, the adoption of the ESRS triggers the need to adjust sustainable finance regulations (SFDR, EBA Pillar 3, Green Taxonomy) and ensure the consistency of the requirements so as to embed the principle of materiality of information in and align these regulations. Identification of additional targeted improvements: At this final stage of the ESRS development, we have identified remaining room for improvements (e.g. clarify how to determine what is material information, how to calculate metrics including the value chain, what are the precise expectations as regards entity-specific disclosure requirements etc.) to further enhance the usability of the standards. Call for greater interoperability between ESRS and IFRS SDS: Finally, for this first set of ESRS to deliver all its potential added value to sustainability reporting and be recognised as a comprehensive and useful benchmark, a route to greater interoperability with ISSB's IFRS Sustainability Disclosure Standards should be found regarding what is material sustainability-related financial information. We urge the EC and the ISSB to work toward avoiding duplication of efforts for European companies with international reach. Interoperability allowing companies complying with ESRS to be considered also as compliant with IFRS SDS will be key. Please find attached our detailed analysis and comments.
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Response to Performance of independent audits provided for in the Digital Services Act

2 Jun 2023

As a global audit firm, Mazars welcome the DSA and the DMA as EU pioneering initiatives to create a safer digital Internal Market and stands ready to contribute to their successful implementation. Independent and consistent audits will play an important role in achieving DSA endgoals: the transparency and accountability of major digital players in the Union. Having in mind the overall objective of designing audit rules sufficiently flexible to capture all kinds of VLOPs and VLOSEs and their forthcoming evolutions, we recommend enhancing legal certainty on the independence of the auditor and harmonizing the audit processes and benchmarks to ensure more meaningful audits and the comparability of audit results. (I) Independence of the auditor An efficient implementation of the DSA requires that enough auditors with the appropriate expertise are able and willing to carry out the DSA audits in the long run. While laying the foundations for the creation of a new, diverse, and vibrant audit ecosystem, which is a prerequisite for the performance of high-quality audit, the new regulation should pre-empt unintended consequences in the market for auditing services (DA Whereas 3) especially the risks of concentration and audit capture. In addition, the failure of an audit firm when carrying out another kind of audits (on financial or sustainability reporting) might unintendedly impact the performance of audits under the DSA. This risk might arise if the new DSA audit market replicates the same high level of concentration as the one in the financial audit market. We recommend that the Commission monitors the DSA audit market structure once the first selection of auditors by audited providers occurred and, if needed, takes appropriate action. In addition, to facilitate the selection of auditors by the audited providers, the Delegated Act could further specify the definition of forbidden non-audit services that are likely to generate conflicts of interest. Bidding predictability would be enhanced if the specific consulting services cases were listed in a core Article of the Delegated Act. (II) Meaningful and comparable DSA audit For the DSA audits to successfully achieve their purpose, we recommend to further define the benchmark according to which their performance will be appreciated. 1. For audit reports and audit results to be consistent and comparable, they should be performed according to common specific criteria. The auditor should not be held responsible for defining such criteria (including materiality thresholds, samplings and tests criteria), but the Commission and/or an independent body should establish them and provide appropriate guidance. Until then, auditing organisations should perform the audit against the criteria provided by each audited provider, in conformity with DA Article 5.1. 2. To prevent diverging practices and approaches by auditing organisations, the DA should specify the assurance standard according to which the DSA audit should be performed. The international assurance standard ISAE3000 helps harmonising the audit and testing methodologies performance. 3. Finally, to clearly define the roles and responsibilities of the audited provider and the auditor, the DA should explicitly require a management assertion on the VLOP/SEs compliance with DSA requirements in a core Article. Phasing in Limited and Reasonable Assurance Having in mind that the whole DSA auditing process will go through a learning curve, to ensure that the right conditions and benchmarks are in place to efficiently perform a DSA audit with a reasonable level of assurance, we recommend adopting a two-step approach that will allow to build the right DSA audit framework over time and experience. The first DSA audits due in September 2024 would benefit from being performed with a limited assurance, and the reasonable level of assurance could be required for the second DSA audit exercise (2025).
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Response to Initiative on EU taxonomy - environmental objective

3 May 2023

We are providing feedback on Amendment to Taxonomy Environmental Delegated Act: Annex II to Environmental Delegated Act (CE). More specifically: 4. Information and Communication 4.1 Provision of IT/OT data-driven solutions and software. In general, we are missing cybersecurity protection in the listed activities paragraph. In the attached document (template_for_feedback_Mazars_ESET_3_5_2023), we disclose our reasoning why such a topic shall be listed in activity description. When formulating our feedback, we closely cooperated with a range of experts from ESET antivirus software company. This company has a global reach and represents a forefront in cybersecurity measures. We are ready to parcipate at whatever discussion table in order to support our argumentation. Martin Dolinsky Mazars Slovakia
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Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

25 Jan 2023 · Audit and next mandate

Response to Sustainable corporate governance

23 May 2022

Mazars comments on the European Commission’s Corporate Sustainability Due Diligence Directive proposal Mazars welcomes the proposal for a Corporate Sustainability Due Diligence Directive (CS3D), which usefully completes the Governance pillar of the Corporate Sustainability Reporting Directive (CSRD) proposal. There is a need of coordination between both proposals on definitions and subsidiarity principles, for the consistency and practicality of the level 2 standards i) to allow Member States to adjust their corporate governance and sustainability national frameworks and ii) to ensure an effective implementation mechanism. The following points deserve further consideration to achieve the purpose of the draft CS3D: 1/Accountability of the due diligence verification process Due diligence verification by independent third parties (statutory auditor or another service provider) is key to strengthen stakeholders’ confidence in the process and reporting. Mazars contributed to the Accountancy Europe paper on Supply Chain Sustainability Assessment, which provides examples of supply chain assurance practices by professional accountancy firms. The different assurance requirements should be of high-quality, consistent, and provided by competent professionals, following transparent procedures. Due diligence should not be limited to the first tier of supply chain but encompass those posing major risks. We also support the inclusion of third countries corporations (around 1% of European companies). An in substance progressing extension in scope should be considered - via level 2 standards and/or level 3 guidance, encouraging the main contractors and banks to embed recommendation of application in the supply chain tendering/financing processes, as it is the case in the OECD and UN guidelines. Along with the EFRAG standards, the CSRD and the CS3D build up the bricks and the design of an internal control system on sustainability reporting (including the governance pillar). Hence, it is important to extend the mandate of the audit committee (or equivalent body for small and medium undertakings), from financial reporting to sustainability reporting and other types of assurance providing, including the independence of the assurance providers. 2/Due Diligence process and definitions - ‘Contractual cascading’ (article 7) Due Diligence process is the cornerstone of CS3D: large companies should aim at identifying potential adverse impacts within their supply chain and not offload the risk via contracts, especially with SMEs that may lack resources to comply. In conjunction with accompanying measures, we support the use of contractual provisions as additional comfort, but not as the main solution. The business partner should comply with the company’s code of conduct, provided it follows a transparent procedure as well. - Internal Controls (article 10) We believe that the obligation for companies to carry out periodic assessments of their operations and processes (article 10) is not sufficient to ensure compliance. Instead, we suggest that companies should establish appropriate internal controls, which ensure allocation of duties, completeness, and the necessary safeguards. Ahead of publishing the delegated acts on the obligation for companies to publish an annual statement (article 11), the Commission should interact with stakeholders on implementation options. - Directors’ duty of care and overseeing due diligence (Articles 25, 26) While we support the provisions included in Articles 25 and 26, the ‘board’s collective responsibility’ needs to be further clarified. To help transposition and secure proper implementation, special attention should be paid to the different existing national regimes on board responsibility (collective and individual).
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Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

31 Mar 2022 · EU Corporate and Sustainability Reporting

Response to Strengthening the quality of corporate reporting and its enforcement

3 Feb 2022

Audit quality is the cornerstone to building trust amongst investors and other stakeholders, ensuring efficient allocation of capital and contributing to the development of a sustainable and prosperous economy in the EU. Statutory auditors work for the public interest and play a critical role in setting confidence by attesting corporate reporting on financial and sustainability information. Since the adoption of the 2014 Regulation, the efficiency of corporate reporting has been challenged by a series of high-profile corporate failures, a remaining high concentration in the PIE audit market (EC Market Monitoring report, 2021) and insufficient regulatory and supervisory convergence. Besides, the introduction of an integrated reporting combining both financial and sustainability reporting calls for redesigning the PIE audit market structure and creating incentives for high quality audit and reliable information. We welcome the EU consultation process triggered by this Call for evidence, and its ambition to simplify and upgrade audit legislation in the EU, in order to contribute to a more efficient and integrated Capital Markets Union (CMU), and improve reliability of sustainability reporting. Corporate integrity and the prevention and detection of fraud are critical to building investors’ confidence. The current legal framework for corporate governance in the EU is properly designed to reach this objective if audit committees are in place, at least for major PIEs. From our experience, existing requirements will result in better audit quality if best practice regarding internal controls are more widely spread and monitored within the Single Market. Such corporate governance codes for PIEs should include a more explicit definition of roles and responsibilities of the management, audit committee, board and auditors in order to avoid loopholes or grey areas. As a global audit-centric firm with European roots, operating in over 90 countries, Mazars believes that the forthcoming intervention by the EU to enhance the corporate reporting of PIEs should focus on audit quality, and be articulated around the following objectives: - Introduce the provisions of upgraded international standards on quality (ISQM 1 & 2) within the EU, in order to enhance quality controls and engagement risk monitoring within audit firms. - Reduce fragmentation in the audit market by further harmonizing mandatory firm rotation and prohibited non-audit services rules, for which transposition options have translated into a highly complex and risky framework. - Reduce the existing market concentration, thereby increasing choice for PIE when selecting an audit firm, in order to enhance the resilience of the audit profession and its ability to address new requirements (CSRD). There are cost-efficient methods which could help diversify the audit market, with a predictable transition period, and enable effective supervision. - Introduce a mandatory “four eyes principle” for the audit of large and listed PIEs, credit institutions and insurance companies, leading to a cross-review and co-signature of audit opinions, which embed independent and high-quality cross-checking within the audit process. - Favor supervisory convergence by granting the CEAOB a formal advisory role on more detailed delegated acts adopted by the Commission, and a capacity to promote convergence of inspection practices by national competent authorities. Academic and theoretical studies have intensely debated joint audit as a method of reform without reaching a conclusive answer. We recommend focusing future discussion on the practical experience of preparers, auditors, investors and supervisors, and on identifying the prerequisite and conditions for an efficient way to combine more than one auditor, in order to improve audit quality and create a vibrant audit market. We stand ready to share our experience with the Commission.
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Meeting with Pascal Canfin (Member of the European Parliament)

2 Dec 2021 · Green finance

Response to Revision of Non-Financial Reporting Directive

13 Jul 2021

As an integrated partnership delivering audit services to PIEs across 24 EU Member States, Mazars welcomes the Commission initiative to define and coordinate sustainability reporting and assurance requirements at EU level, in order to make companies more accountable for their social and environmental impact, provide investors and other stakeholders with reliable, relevant and comparable information and, in line with the Sustainable Finance Agenda, foster the necessary changes for a sustainable, inclusive and fair economy. Mazars overall supports the Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD), including the development of European sustainability reporting standards by EFRAG: it is a significative step forward to leveraging non-financial corporate information and incentivizing responsible approaches to business and investment. 1. Mazars welcomes the CSRD proposal to expand to all large and listed companies the requirement for ESG information, to be reported according to mandatory EU sustainability standards, under a dedicated single digital format, and for this information to be audited. The Directive proposal to categorize sustainability factors according to Environmental, Social and Governance (ESG) pillars, based on double materiality, efficiently addresses the growing need of structured and comparable non-financial information, versus current diverse corporate reporting practices. 2. While assessing companies’ multidimensional and long-term business model and performance, sustainability reporting is to become a critical counterpart to financial reporting. Sustainability reporting and assurance should rely on equivalent quality and reliability requirements to existing financial reporting standards. Hence, Mazars commends the Commission proposals to amend the Accounting Directive, the Audit Directive and the Audit regulation, to involve, harmonize and properly cover the audit of sustainability information within an European level-playing field. 3. Along with the Commission, Mazars recognizes the need for “uniform assurance practices (…) across the EU” and for further harmonization of the “limited assurance” definition. In addition to the standard-setting process under delegated acts (CSRD Proposal Art. 3 (12), the Commission should further clarify the harmonized roadmap from limited to reasonable assurance. 4. “To ensure connectivity between, and consistency of, financial and sustainable information” (§ 54), and keep pace with investors’ and stakeholders’ expectations, Mazars highlights the cornerstone role given to statutory auditors in the CSRD proposal. As quality drivers with a trustworthy methodological approach, they play a key role in building trust and consistency, and prevent sustainability reporting from green or rainbow-washing suspicions. This was brought out by the recent worldwide IFAC study, The State of play in Sustainability Assurance. 5. Since CSRD is about to create a new market with substantial business opportunities, the Commission should ensure this new market is open and competitive, with no entry barriers, so that companies compelled to meet new sustainability reporting requirements have a real choice - beyond the current four dominant audit networks. Mazars fully shares the Commission concerns on reproducing - and aggravating – the long-lasting financial audit market shortcomings and welcomes the Commission initiative to take into consideration innovative methodological framework such as joint audit to address the risk of “further concentration” (§ 54). 6. While sustainability reporting requires significative investments, and additional technical and human capabilities, non-dominant audit firms are ready to play a key role in the development of a sound market that supports sustainability reporting and assurance, provided that the regulatory landscape be sufficiently structured throughout the CSRD proposal and the forthcoming Audit Regulation Review.
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