Non-financial reporting and assurance trends in selected Central European countries

Zanócz, Anett (2025) Non-financial reporting and assurance trends in selected Central European countries. PÉNZÜGYI SZEMLE/PUBLIC FINANCE QUARTERLY (1963-), 71 (3). pp. 94-115. ISSN 0031-496X

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Abstract

This study examines how sustainability reporting and assurance enhance a company’s environmental, social, and governance (ESG) impact. The Non-Financial Reporting Directive (NFRD) improved transparency in non-financial reporting, requiring companies to disclose policies, risks, and outcomes related to ESG issues. However, the Corporate Sustainability Reporting Directive (CSRD) expands on these requirements and enforces third-party assurance, reinforcing the European Sustainability Reporting Standards (ESRS). This shift forces companies in the scope of CSRD to enhance transparency, credibility, and accuracy, prompting the development of innovative assurance methods by auditors. My empirical research focuses on Central and Eastern Europe with comparator cases from Germany and Luxembourg, analyzing twenty years of practice using Refinitiv ESG data and Kaplan-Meier survival analysis. Research questions were posed about time-to-adoption and differences between external assurance providers. The research highlights Hungary as an early adopter of CSRD, which is trying to promote corporate compliance, while Austria is lagging behind. The analysis of audit trends shows that Big4 firms have dominated auditing in recent years, with limited industry-specific deviations, while the role of sustainability expert assurance has tended to decline. Kaplan-Meier’s survival analysis of assurance maturity shows that large firms typically introduce external assurance after about three years of reporting, and high-impact sectors adopt assurance earlier. The study highlights practical implications for companies preparing first-time ESRS reports with mandatory assurance and discusses limitations related to sample composition and regional scope.

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