Sumer Northern Ireland is gearing up for further growth as it recruits to meet rising demand from the SME sector, says Managing Director Brian Clerkin With optimism on the rise in Northern Ireland’s small-and-medium sized enterprise (SME) sector, Sumer Northern Ireland is poised to support future entrepreneurial success with a growing team and plans for future expansion.  Established in July 2024 when the Belfast office of ASM Chartered Accountants joined the UK-headquartered Sumer Group, Sumer Northern Ireland is led by Managing Director, Brian Clerkin, a Chartered Accountant who has been at the head of the firm for over 12 years. Clerkin joined the Belfast Office of ASM Chartered Accountants in 1997, qualifying as a Chartered Accountant with the firm in 2000. In the years since, he has seen the firm go from strength to strength. “When I joined, we were completely different to the firm we are today. For a start, we were much smaller. There were probably only 20 people in the firm back then,” he says. “I was lucky to spend most of my training contract working for one of the founders, Stephen Sproule, and that was an invaluable experience. I’ve often described it as the best business education I didn’t have to pay for. “Having passed my FAEs and placed in the top ten, I sat down with the Stephen and we worked out a route for the next few years that would give me the best chance of achieving an equity stake.” Clerkin became a Director of the firm in 2004 and a shareholder in 2005. He was appointed Managing Director of the Belfast office of ASM Chartered Accountants in 2012. “Last year, the shareholding directors in the Belfast office decided to join the Sumer Group and we did so officially on 1 July 2024,” Clerkin says. “We were seeing lots of opportunities in the marketplace to take on new work and we felt we needed to make a strategic decision to best enable the firm to grow further and provide opportunities for our future leaders to come through.” Consolidation trend This decision reflects the wider trend towards consolidation that has taken root in the accountancy sector in recent years. “There is a lot of consolidation at the moment, probably to be fair more so in England, Scotland and the Republic of Ireland, than in Northern Ireland to date,” Clerkin says. “Regardless of jurisdiction, however, firms are all facing similar issues, including an appetite for external investment, increased regulation, succession challenges and the need for mid-tier firms to invest in people and technology.” The merger marked Sumer Group’s entry into the accountancy market in Northern Ireland and a new chapter for the team in Belfast. “We were confident this strategic partnership would not only enhance our growth prospects but also expand the range of services and expertise we can offer our clients,” Clerkin says. “Sumer is already a top 15 UK accountancy practice on a mission to champion SME businesses. It was recently recognised in the 2024 Top 50+50 Accountancy Firms by Accountancy Age for being the fastest growing accountancy firm in the UK.” Since the merger, Sumer Northern Ireland has increased its headcount by 20 percent to 120 in response to rising business demand. “We have seen a significant increase in client business since July 2024 coming from clients we already worked with and new clients in the sectors we serve—hospitality, tourism and leisure, manufacturing, distribution, not-for-profit and the public sector, engineering, technology and IT,” Clerkin says. SME outlook in Northern Ireland  Sumer Northern Ireland continues to provide a range of services to SMEs in Northern Ireland, spanning audit and accounting, corporate finance, insolvency, forensic accounting, internal audit and tax services. “The business landscape is constantly evolving, and our clients are subject to an array of economic challenges and opportunities,” Clerkin says. “The issues with our infrastructure and planning systems here in Northern Ireland have been known for years and will take some time to fix. “However, I think businesses in Northern Ireland would like to get a sense that the Northern Ireland Executive recognises these problems and has a tangible plan to address them.  “The blame game, and waiting for Exchequer monies to arrive from London, can’t be an acceptable position to maintain. “Other than that, I think businesses are waiting to see the full impact of the increase in employment costs announced in the 2024 Autumn Budget on both their own cost bases, but also on input costs and consumer confidence.  Despite these challenges, businesses in Northern Ireland are optimistic about their future prospects, according to a Sumer Group report published last September. Produced in partnership with the Entrepreneurs Network, the United Growth report highlighted Northern Ireland as a key region with “particularly bright prospects”.  Seventy-three percent of the Northern Ireland businesses surveyed in the report signalled their intention to increase staff numbers over 12 months, while 78 percent said they anticipated a rise in turnover.  This level of optimism showcased Northern Ireland’s potential as a hub for entrepreneurial growth, the report stated. “I think what we are seeing on the ground is continued growth with cautious optimism,” Clerkin says.  “Northern Ireland has been able to take advantage of opportunities to significantly grow both our tourism and IT industries over the last 10 to 15 years. “If a similar approach is taken to aligning the education sector, local government and the Executive, there is no reason why other sectors such as professional services, high-value engineering, agri-food and biopharma couldn’t also see a similar rise in output and productivity.” Future expansion Sumer Northern Ireland is ready to support this growth with its recent merger allowing the firm to take a “more robust, technology-driven and cost-effective” approach to the non-client facing side of the business in areas such as recruitment, compliance and marketing, Clerkin says. “Personally, I am really enjoying collaborating with the other firms in the Sumer Group to identify and take on cross-referral opportunities, which play to the different areas of expertise within the group,” he says. The firm is now exploring opportunities to grow organically and through potential future acquisitions.  “We expect to announce a number of acquisitions over the course of 2025,” Clerkin says, “and, on the broader stage, the Sumer Group is actively looking at making strategic acquisitions both in those areas of the UK where we are not yet represented and in the Republic of Ireland.”

Urgent policy action is needed to protect the EU from Trump’s protectionist foreign policy and rescue a West increasingly beholden to China and Russia, writes Judy Dempsey  The years after the devastating Second World War shaped the cooperative relationship between the US and Europe. Washington launched the German Marshall Fund to put what was then Western Europe back on its feet.  Inspiring European figures led by French foreign minister Robert Schuman, and supported by the US, founded the European Coal and Steel Community—the precursor to today’s European Union (EU). This was a special era. For Europe, after the nightmare of the Holocaust and Nazism followed by Stalinism, it was about forging an ideology based on peace, democracy, economic prosperity and integration—all in a divided Europe.  In Washington, multilateral institutions prospered. They included the World Bank, the International Monetary Fund, the World Trade Organisation, and US support for United Nations (UN) bodies, such as the International Atomic Energy Agency, the World Health Organisation and other multilateral agencies.  More recently, the US, the EU and many other countries ‘updated’ their approach to multilateralism with the signing of the Paris Agreement. This legally binding international treaty on climate change was adopted by 196 parties at the UN Climate Change Conference in 2016.  By contrast, US President Donald Trump’s inauguration speech this year dispensed with aspects of multilateralism and cooperation, making transnationalism and bilateralism his administration’s leitmotiv.  Trump has walked away from the Paris Agreement and the World Health Organisation, and intends to slap heavy tariffs on EU exports to the US unless, of course, European companies move across the Atlantic…or Europeans buy more American energy…or Europeans spend a whopping five percent of their gross domestic product on defence to take on the costs of their own security.  They will also be encouraged to buy American military equipment. Most European leaders have professed shock at Trump’s pronouncements—as if they didn’t know what to expect. They say they want to get on with the new US administration, but on what basis? Trump is no admirer of the EU. He challenges the bloc’s ideological edifice, built on accountability, the rule of law and fundamental values such as an independent media, an independent judiciary, human rights and asylum—and multilateralism.   These qualities don’t have a ‘shop price’. Trump’s policies do. His focus is on deals and trade-offs.  This may suit some EU countries, such as Hungary and Slovakia, whose leaders are pro-Putin—although it is worth noting here that Hungary, under Prime Minister Viktor Orban, is becoming a hub for Chinese investments which may not please Trump.  There is also Italy’s Prime Minister Giorgia Meloni, the only European leader to attend Trump’s inauguration. She could be pivotal in making the EU-US relationship constructive. Further, European countries are unprepared to strategically work together for their collective security, whether or not they are neutral. Russia’s war on Ukraine should have provided adequate warning to European countries, particularly Germany, to prepare for Europe’s security, the security of Ukraine and their eastern neighbours. It hasn’t. With some exceptions, European countries such as Poland, Denmark and the Nordic states understand the threats posed by Russia. The same cannot be said for the European perception of Trump’s new ‘transactional’ administration which lacks the post-1945 focus on Atlanticism. Instead, Europe’s liberal elites continue to resort to their complacent comfort zones.  Criticising Trump does not provide the basis for concrete policy safeguarding multilateralism, protecting Europe and rescuing a West increasingly beholden to China and Russia. Who in Europe is taking the lead? Judy Dempsey is Non-resident Senior Fellow at Carnegie Europe *Disclaimer: The views expressed in this column published in the February/March 2025 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees or the editor. 

Paula Travers, founder of Travers Accounting Services, has spent close to three decades forging her own path in the world of finance. Now at the helm of her own firm, she reflects on the personal and professional traits that have shaped her success As a child growing up in Donegal, I thought I would like to one day work in a bank. At some point, around the age of 16, I decided that being an accountant would be better.  We had a great accounting teacher in school, and I always enjoyed the subject.  In the pre-internet age, I reviewed as many university prospectuses as I could get my hands on and decided that, rather than study pure accounting, I would do a broader degree.  I opted for commerce at University College Galway (now NUI Galway), choosing the accounting stream in my second year.  After college, I spent the summer working in a bar in London, then came home and applied for as many trainee accountant roles as possible. Eventually, I started work as a trainee with a small practice on the north side of Dublin.  Transitioning from being a college student to training was a shock to the system. I had to work full-time, attend lectures in the evenings and weekends, and I was paid next to nothing. It was tough going, but I was very determined to succeed. Career advancement I would say I have very much steered my own course regarding career advancement.  I learned through experience to trust my gut and make “the next move” when the timing felt right to me. I never let the grass grow under my feet and moved when others may have stayed.  The qualities that have helped me progress my career have included making my immediate boss’s life easier by being reliable, a good communicator and not being afraid to voice my professional opinion when needed.  The ability to communicate effectively to people at all levels has been crucial. As accountants, we work in a people business. It feels good to smash the stereotype of the “boring accountant” by showing you have a personality!  I moved back to Donegal in 2006 at a time when the job market here was quite limited. I spent several years taking on maternity leave cover roles before securing a longer term position as Financial Controller with a company in west Donegal.  Lessons in perspective and boundaries My experience is likely quite different from most pursuing a career in Chartered Accountancy.  My daughter was born during my training contract and I undertook my Professional 3 (now CAP 2) exams when she was only three months old.  I combined my maternity (then just 14 weeks) and study leave, took one week off after my exams, and was straight back to work.  It was very tough, but at that time, the expectation was that you just had to get on with it, and I was very determined to prove that having a child would not derail my career.  I would hope that the situation is better today, but, while statutory leave entitlements have improved considerably, statistics show that motherhood does negatively affect a woman’s career progression, which is unfortunate and unnecessary.  To retain this cohort of talented and experienced professionals, employers must facilitate flexibility above all else. For me, the key to work-life balance remains elusive, however. This is something I’m still figuring out.  As I get older, and with the passing of both my parents within the past 10 years, it is a question of priorities. Work must take priority at certain times, and life must take priority at others.  Challenges that may have stressed me out 20 years ago, don’t anymore. This comes down to perspective and realising that time is the most critical resource we all have.  The biggest challenge for me is establishing a good balance between work and rest. Being self-employed, the temptation is there to work all the hours.  If you do that, however, other important parts of your life and wellbeing will eventually suffer, such as your health (both mental and physical) or your relationships.  It is crucial, therefore, to protect your time at all costs by establishing boundaries that align with your life.  Your energy is a valuable resource; don’t waste it on people and situations that drain you. Have the confidence to set unapologetic boundaries, rather than taking on the role of a martyr. The challenge lies in setting up boundaries and structures in your working life and adhering to them. Always strive to maintain perspective, as it can significantly alleviate the stress of balancing work and personal life.  Finding confidence and support Since becoming self-employed, I have connected with networks of female business owners and joined smaller groups of other accountants, both women and men.  I have only tapped into mentoring and networking since becoming self-employed. These networks have been invaluable in providing a sense of companionship and a recognition that most challenges are shared, giving me the confidence to persevere.  I highly recommend hiring a professional coach, particularly for self-employed people who need a sounding board and a space to offload to someone outside their immediate circle.  A coach can provide valuable insights, help you set and achieve goals and hold you accountable for your actions. Coaching is also great for maintaining focus and staying on track. Twenty-nine years of success The foundational training and experience you receive as a Chartered Accountant sets you up to work in practice, industry or as your own boss. That has been my trajectory.  The advancements in technology and the advent of social media mean that self-employment as an accountant is incredibly accessible, and I have created a business that works for me.  When I entered this profession (29 years ago this month), this was not something I thought was possible.

Julia Rowan answers your management, leadership and team development questions. Question I work in HR in a large organisation. We put great store in supporting managers to select the best talent with job descriptions, interviews, onboarding, managing probation and so on. We stress the importance of feedback and tackle any issues that arise during probation. We often hear that everything is fine. Then, when things go wrong, managers call on us to sort out issues that were known about during probation. We have tried to tackle the issue in many ways, but the problem continues. Answer It is tough to work in HR. HR straddles the challenging divide between ensuring compliance—managing systems, procedures and policies to meet legal and organisational standards—and curating the culture that enables leaders to create an engaging, inclusive and high-performing environment. This dual responsibility requires HR to act as both the guardians of organisational integrity and the architects of a thriving workplace culture. Under pressure, compliance almost always wins. The question you have shared is very common, and there are several issues at play. First, the need to urgently ‘fill a gap’ caused by an impending departure or increased workload may take precedence over finding the right fit. Second, managers often wish to emphasise the positive and worry that developmental feedback will demotivate their team. They might not have established, whether at the interview or during induction, that sharing feedback is a normal practice. Under pressure, they may hesitate, hint or hope that instances of poor performance do not reoccur. Third, managers often lack the language to address subtle issues, such as high performance paired with poor behaviour (or vice versa), and they fear they do not possess sufficient ‘evidence’ to support any concerns they have. The plethora of policies, procedures and laws surrounding these issues can be daunting. Most importantly, managers often believe they are accountable for their team’s performance and that underperformance reflects poorly on them. This perception often drives them, leading them to overlook or conceal issues, even rejecting offers of assistance. HR can help managers realise that nobody can ‘own’ the performance of another person—people own their own performance. However, the manager owns the responsibility for setting appropriate goals, creating the right environment, sharing positive and developmental feedback and running great meetings. HR should assist managers in introducing the topic of feedback during both the interview and induction. This creates an expectation in the new hire that they will receive feedback, making it easier for the manager to access this space. My advice to you is to maintain close communication with managers during probation and avoid depending solely on the probation forms/procedure. Engage with managers about their new hires and reflect on the interview: Are the promised skills evident? What positive feedback has the manager provided to the new hire? What developmental areas are being worked on? Is the new hire the right fit? It may be smart for the senior manager to conduct this process with the hiring manager, as it predominantly concerns the organisational culture, which should be championed by senior leadership. Encouraging senior leadership to fulfil their ongoing role as shapers of organisational culture can be a challenge for HR, requiring consistent advocacy, a clear vision and deep commitment to the cause. If you read one thing... Flourishing: How to achieve a deeper sense of well-being, meaning and purpose—even when facing adversity by Dr Maureen Gaffney. This book helps individuals to build confidence and self-awareness, which is very helpful for leaders. Julia Rowan is Principal Consultant with Performance Matters Ltd, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

Special guest speaker and Tesco Group CEO Ken Murphy, FCA, shared his career insights and outlook for the future of business and the Irish economy at this year’s Annual Dinner As Tesco Group Chief Executive, Ken Murphy is at the helm of the UK’s largest grocery retailer with an annual turnover of £61.5 billion and over 4,500 stores in the UK and other markets employing some 330,000 people. Speaking on stage at the Chartered Accountants Ireland Annual Dinner in Dublin on Friday, 24 January, in conversation with MC Sarah McInerney, Murphy discussed his career, expectations for the Irish economy and shifting trends in the world of retail and business. “The most obvious change I’ve seen since taking on this role is the impact technology has on every decision you make today,” Murphy said. “When I joined Tesco, we had about 2,000 people in technology. Today, we have 5,000 and I wouldn’t be surprised if we have 10,000 by the end of the decade.  “It’s just such a critical part of any business today. Almost anything you want to do now has a technology dependency. “The opportunities are phenomenal. AI will absolutely turn everything we know on its head over the next five to ten years. Energy is the only real limiting step I can see at the moment.” Originally from Cork, Murphy studied commerce at UCC and trained as a Chartered Accountant with Coopers & Lybrand (now PwC), beginning his career with Procter & Gamble. By the time he had been appointed Finance Director with Alliance Unichem just a few short years after qualifying, it was clear to Murphy that his professional future lay in the world of business and retail. “I am bad at maths and even worse at physics, but I’m good on numbers. I hated auditing but numbers came easy. At the end of my training, my Audit Partner said to me, ‘Ken, you really enjoy business; auditing, not so much’, which was a gentle nudge to do something else.”  It was when he joined Procter & Gamble that, Murphy says, his career really “got into gear” and remaining open to opportunities has been the cornerstone of his success in the years since.  His advice to young accountants starting out today is to “open more doors than you close—and take risks”. “It doesn’t always work out,” he said, “but you definitely learn more from the failures than the successes and you have a lot of fun along the way, as long as you can take the knocks.” Murphy was appointed Managing Director of Health and Beauty, International and Brands, at Boots in 2013. He subsequently became Joint Chief Operating Officer at Boots UK & Ireland before rising to Executive Vice President, Chief Commercial Officer and President Global Brands at Walgreens Boots Alliance.  He was appointed to the Board of Tesco PLC as Group Chief Executive in October 2020.  Although the transition from health and beauty to food retail proved a steep learning curve, Murphy describes his current role as “the best job I’ve ever had”. “There is a much higher level of intensity in food retailing,” he said. “When you’re a high-street brand like Tesco, the public scrutiny is extraordinary. Nothing prepares you for that. “It is extraordinarily intense, and, at the same time, we are thinking very long term in some of our strategies. I love the business. I love what we do. I love the people I work with. “We have a lot of fun in an intensively competitive environment. We never have a day where we’re bored or thinking, ‘what will we do today?’” Tesco has a growing presence on the island of Ireland, where it operates 181 stores in the south and 50 in the North.  Last October, Tesco committed close to €200 million to the renewal and expansion of existing multi-year partnerships with Irish suppliers in the south.  The retailer is, Murphy said, the world’s leading purchaser of Irish food and drink, buying €1.6 billion of Irish food and drink annually—more than the value of Irish food and drink exported to any country in the European Union. “We have over 500 suppliers in Ireland and three quarters would be classified as SMEs employing 250 people or less,” Murphy said. “One of the things that really struck me when I started this job and went out visiting our suppliers, were the stories they would tell me about how they were basically working out of a shed 35 years ago, then they got a contract with Tesco and now they have a massive organisation. “That’s true of a number of our biggest Irish suppliers who have been extraordinarily successful in partnership with Tesco.  “We love working with our suppliers and helping their brands grow. We are fair and transparent, but we are quite tough. “If you’re successful with us, you tend to be successful with other people. “We like to think we reward real entrepreneurial spirit and innovation–particularly in Ireland where food is enormously important and something we’re famous for globally.” The future fortunes of the Irish economy will not be without challenge, however. “If I look at what Ireland has done in terms of its brand relative to other countries, I’d say we do a pretty good job. We could always do better but, with the work of some of our semi-state bodies, whether it be Enterprise Ireland or Bórd Bia, we punch above our weight,” Murphy said. “The challenge now is, ‘how do we really take that for a spin over the next five to 10 years in a global way?’ and I would be nervous of our dependency on US foreign direct investment.” With US President Donald Trump’s ‘America first’ trade policy starting to gather steam, Murphy cautioned against a cavalier approach to transatlantic relations. “I think Ireland punches above its weight in terms of our influence in the EU and in terms of the US, but we shouldn’t overplay our hand with the US.  “I am very encouraged by the fact that there is hugely deep investment in Ireland over a very long period of time, but I feel we shouldn’t assume our special relationship with the US will endure forever.  “There are competing interests, and we should be mindful of that but there is a lot of capability and competence in Ireland, so I feel like we have an opportunity. “Ireland has the most stable political environment in Europe. We still have one of the best educational standards in Europe. We have a lot of other challenges, but I believe it’s all to play for.”

The experiences of the first wave of entities preparing CSRD sustainability statements hold important lessons on the complexities of the double materiality assessment.  Gareth Martin, Jennie Kealey  and Luke Bisson delve into the details Some of the largest entities in Ireland are in the process of issuing their first mandatory sustainability statement under the EU’s Corporate Sustainability Reporting Directive (CSRD). They are part of the first wave of reporters following transposition of the CSRD into Irish law for accounting periods beginning on or after 1 January 2024.  To identify sustainability information for disclosure, an entity is first required to complete a double materiality assessment (DMA) to determine material impacts, risks and opportunities (IROs) in relation to environmental, social and governance (ESG) matters.   Double materiality is a new concept aimed at enhancing the existing understanding of financial materiality already familiar to accountants. It extends financial materiality considerations to encompass an understanding of both the entity’s impact on the environment and society, and the impact of sustainability matters on its own prospects, performance and position—i.e. double materiality considers both inside-out and outside-in perspectives.  The DMA process must comply with the requirements of the European Sustainability Reporting Standards (ESRS), as this is one of the components of a CSRD limited assurance report under International Standard on Assurance Engagements (Ireland) 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information - Assurance of Sustainability Reporting in Ireland (ISAE (Ireland) 3000). ISAE (Ireland) 3000 is the assurance standard that has been adopted in Ireland for sustainability statements prepared under the CSRD. An entity’s CSRD reporting is dependent on a robust DMA output. This is the foundation of the sustainability statement. Here, we offer some practical insights into completing an effective DMA, drawn from our experience supporting clients in this area. Overview of the DMA process  The ESRS do not mandate how to conduct a DMA and, accordingly, each entity should apply judgement to design a DMA process that complies with the ESRS. Figure 1. shows one potential approach to the DMA process. The DMA is comprised of the two interconnected assessments of impact materiality (ESRS 1 3.4) and financial materiality (ESRS 1 3.5). Figure 2 illustrates the double materiality concept. DMA: illustrative examples Some high-level illustrative examples of sustainability IROs are as follows: Impact (positive): Actual positive impact on the environment through adaptation of manufacturing facilities to use renewable energy sources. Impact (negative): Potential negative impact on the working conditions of workers in the value chain through contracting of suppliers in geographies with sub-standard labour laws. Risk: Risk of increased costs in the form of fines from non-compliance with wastewater disposal regulations. Opportunity: Opportunity to increase revenues from sustainability conscious customers through development of biodegradable products. Key practical DMA considerations Some practical considerations should be factored into the DMA process as required by the ESRS. 1. Disaggregation of the assessment The appropriate level of disaggregation must be determined before beginning the DMA process.  The assessment may be disaggregated by business division, country of operation, subsidiary, significant site or significant asset (depending on the nature of the entity) in order to effectively identify IROs at the correct level of granularity and assess their materiality.  For example, groups must consider whether the DMA should be performed centrally at the group level, or at a disaggregated level. 2. Stakeholder engagement approach Stakeholders include key actors in the value chain, such as suppliers, employees and customers, but can further comprise groups such as indigenous communities and silent stakeholders, such as nature. Therefore, while conventional methods of engagement like surveys, interviews and workshops are commonly used, it is also important to consider alternative approaches. This might include analyses of ecological, pollutant or geographical data. Engagement may also be indirect, through stakeholder representatives or subject matter experts. Stakeholders should only be engaged in the assessment of topics where they have the appropriate experience and/or expertise required to provide accurate and reliable input. They may be mapped to specific IROs on the longlist to facilitate the provision of IRO inputs, where appropriate, to their position in the value chain. 3. Value chain boundary When performing the value chain analysis step of the DMA process, management should determine the point or “boundary” in the value chain up to which information should be collected. If this boundary is not effectively defined during the DMA, there is a risk that IROs related to components of the value chain will not be identified. Consequently, value chain information may not be presented completely in the sustainability disclosures.  For example, if only first-tier suppliers are considered as part of the value chain, the impacts of second- or third-tier suppliers connected with the entity’s operations may be overlooked in the DMA, even though they are within the scope of impact materiality. 4. Material financial effects Sustainability risks and opportunities are often drafted without properly considering their material effects on financial position, financial performance, cash flows, access to finance or cost of capital—or evaluating their consistency with the information disclosed in the financial statements. Likewise, it is common for management to only consider and score the likelihood and magnitude of a risk or opportunity, even though ESRS 1 stipulates that it is the likelihood and magnitude of the financial effects that should be assessed. 5. Dependencies on natural, human and social resources Risks and opportunities derive not only from impacts, but also from an entity’s dependencies on natural, human and social resources. It is therefore important for management to consider dependencies as potential sources of risks and opportunities when assessing the financial effects triggered by sustainability matters. For example, a manufacturing entity should consider its dependencies on energy, raw materials, customer relationships and healthy and skilled workers, among others, when drafting and assessing the materiality of IROs on the longlist. Dependencies on biodiversity and ecosystems should also be identified and assessed under the ESRS 2 IRO-1 requirements of ESRS E4. This includes an assessment of sites located in or near biodiversity-sensitive areas.  6. IRO scoring approach The ESRS do not define an IRO scoring approach. However, the factors for scoring are outlined in ESRS 1 and elaborated on in European Financial Reporting Advisory Group Implementation Guidance 1 (EFRAG IG 1) Material Assessment. Scoring should also align with the entity’s existing risk management framework where possible. ESRS 1 does prescribe the use of an appropriate quantitative and/or qualitative threshold to determine which IROs are material.  EFRAG IG 1 provides graphical representations of such materiality thresholds in both columnar and matrix formats. It is important to note that this guidance is purely illustrative. Management should document the rationale supporting their choice of scoring scales and thresholds—and ensure that these decisions have undergone robust review and validation. 7. Entity-specific disclosures When an entity concludes that an IRO is either not covered or not covered with sufficient granularity by an ESRS—yet is material due to its specific facts and circumstances—additional entity-specific disclosures must be provided to enable users to understand the sustainability-related IROs. Given that sector-specific standards have not yet been incorporated into the ESRS, it is paramount that management implements robust processes to assess potential IROs to identify any that are not aligned to the ESRS topical standards. For such topics, entity-specific disclosures should be drafted which adhere to the general disclosure requirements set out in ESRS 2 and meet the qualitative characteristics of information in accordance with ESRS 1. DMA: useful insights Here are eight insights that can be applied to support the DMA process: 1. The DMA process requires detailed step-by-step planning. Often, input is needed from across the organisation, particularly where a materiality assessment of sustainability information is being carried out for the first time. 2. Before beginning the DMA, an entity’s organisational structure should be appropriate for management to effectively lead and oversee the DMA process, and sufficient training should be provided. Identifying key internal stakeholders, such as members of the sustainability, environmental and financial reporting functions, will facilitate an effective assessment, as will forming a working group to co-ordinate day-to-day aspects of the DMA. 3. Validation roles for key decisions at each stage of the DMA should be clearly defined and documented. A board level steering committee could be formed for the purpose of reviewing and validating key decisions before the working group proceeds to the next stage of the process. 4. Documentation of the DMA process should begin at the inception of the assessment. This documentation should be clear, specific and detailed enough to enable assurance practitioners to understand and assess each stage of the DMA process. A centralised change log should be maintained to provide a clear and traceable trail of amendments and judgements, including their supporting rationale, over the course of the DMA. 5. Methods of engagement likely to garner the most effective coverage of views across all affected stakeholder groups should be considered. These might include surveys, interviews and workshops. A first step here might involve mapping affected stakeholder categories to sustainability matters, and prioritising different categories for engagement purposes. 6. Management should gain an understanding of the ESRS disclosure requirements, datapoints and transitional reliefs early on in the DMA process so they can effectively map material IROs to disclosure requirements and implement interconnectivity between the DMA process and disclosures. 7. When drafting the longlist of IROs and determining material sustainability matters, it is important to benchmark against disclosures prepared by peers and early reporters. This is especially pertinent in the first year of reporting, in order to effectively compare the information that is being disclosed within sectors and industries. 8. A plan for the refresh of the DMA should be agreed on from the outset. Management should implement an annual review of the DMA, comprising procedures such as a landscape review and revalidation of the DMA results. The circumstances requiring a full refresh of the DMA should be defined in accordance with the requirements of ESRS 1 and EFRAG IG 1. The frequency at which a full refresh should be performed regardless of change events must also be considered. Planning for quality and efficiency The DMA is a complex exercise, and each organisation will encounter its own challenges when preparing for the first year of CSRD reporting.  Despite this, there are learning points that can be applied broadly to the DMA in order to improve the quality and efficiency of the process.  Planning each step of the DMA and establishing a process compliant with the requirements of the ESRS will allow entities to develop and perform a robust DMA. Gareth Martin is a Managing Director in  Deloitte’s Sustainability Reporting and Assurance team Jennie Kealey is a Manager in Deloitte’s Sustainability Reporting and Assurance team Luke Bisson is a Senior in Deloitte’s Sustainability Reporting and Assurance team