Evolving Bank Internal Control for CSRD Compliance

Extract

[...] Internal control, historically dedicated to financial compliance, is thus seeing its perimeter expanded. It must now integrate the requirements of sustainability and ensure the quality of extra-financial reporting. The entry into force of the CSRD directive (2022) marks a regulatory break. Replacing the NFRD, it introduces increased transparency and audit obligations, but above all the principle of double materiality. This principle requires banks to report both the ESG impacts on their performance (financial materiality) and their own effects on the environment and society (impact materiality). [...]

[...] The first chapter constitutes the literature review. It retraces the evolution of the regulatory framework related to extra-financial reporting, highlighting the limitations of the NFRD directive and the advances introduced by the CSRD, particularly the principle of double materiality. This review mobilizes recent academic works (Crespi & Migliavacca, 2020; Kodirjonova & Kim, 2023; Bonmariage, 2024) in order to lay a solid theoretical foundation to understand the current mutations of bank internal control in the era of sustainability. The second chapter brings together the methodology, empirical results from the documentary analysis and semi-directive interviews conducted within Crédit Agricole Nord de France, the discussion of the main findings, as well as a set of operational recommendations. [...]

[...] In other words, it is not simply a matter of analyzing how banks comply with the directive, but rather of asking the following question: How can bank internal control evolve to integrate the double materiality requirements imposed by the CSRD directive, beyond mere regulatory compliance, in order to meet the expectations of stakeholders? The main objective of this work is therefore to identify the levers for transforming bank internal control so that it becomes a strategic vector for sustainable governance. Three secondary objectives structure this ambition: analyze the repositioning of internal control in a context of regulation extended to ESG issues, study the integration of stakeholder expectations into rating, evaluation and reporting processes, and identify the technological, methodological and organizational levers likely to guarantee the reliability, traceability and relevance of ESG reporting. [...]

[...] The study conducted is inscribed in a growing need for understanding the internal implications of sustainability. It aims to enlighten banks, supervisory authorities, as well as actors in consulting and auditing, on the concrete modalities of implementing the principle of double materiality in internal control systems. This original positioning allows for a useful contribution to strategic thinking, operational tooling, and governance of sustainable transformation. 3. Structure and Methodology of the Thesis The thesis is structured into two main chapters, complementary and structured to respond to the central problem. [...]