Institutional mechanisms and theoretical foundations of sustainability reporting audit

Introduction. Sustainability reporting and its audit have become an integral component of corporate transparency and accountability systems. Ukraine faces the urgent need to implement the requirements of EU Directive 2022/2464 (CSRD) on mandatory sustainability reporting and its audit into national legislation. Purpose. To explore the theoretical foundations and institutional mechanisms of sustainability reporting audit. Methods. Systematization, theoretical and logical generalization, grouping. Results and conclusions. The theoretical foundations of sustainability reporting audit are based on the principles of neoliberal and institutional theories of economic regulation. The institutional approach is of particular importance, as it enables a comprehensive assessment of regulatory influence on reporting and audit practices, taking into account coercive pressure arising from legal requirements, normative pressure from professional standards, and behavioral responses of enterprises to these requirements. The transposition of Directive 2014/95/EU into the national legislation of EU member states has led to diverse approaches to auditing sustainability reports, ranging from formal confirmation of the presence of a non-financial report within the annual report to mandatory independent audits providing limited assurance. The further development of the regulatory framework, consolidated in Directive 2022/2464/EU, contributed to the establishment of a European model of sustainability reporting audit. This model combines strict legal regulation (CSRD, ESRS), institutional oversight (primarily by national professional audit associations), and standardization of procedures (with the introduction of ISSA 5000 from 2026). Within this framework, assurance services may be provided both by statutory auditors, officially authorized by the state to conduct mandatory financial audits, and by other auditors or independent assurance providers. The findings confirm that a key outcome of implementing Directive 2022/2464/EU is the formation of an institutional mechanism for overseeing the quality of corporate sustainability reporting, which determines the future trajectory of audit practice transformation in both European and national contexts.