When the EU passed the Corporate Sustainability Reporting Directive (CSRD), its goal was clear: strengthen the value of sustainability reports and align them with the rigor of financial reports. Early evidence suggests the law is successful. Companies were required to file their first CSRD-compliant reports last year. Data from Sustainability Reporting Navigator found that reports were longer and more substantive than past voluntary reports. Trellis interviewed Sustainably Reporting Navigator member Maximilian Müller for insights, writing:
“It’s no surprise then that CSRD reports have a different flavor.’These kind of sustainability reports are less PR, more 10-K-like,’ said Müller. In practice, that means they are longer — 30 percent so when compared to earlier reports from the same company, he estimates — and less glowing in tone.
As required by the directive, companies also have to obtain what’s known as ‘limited assurance’ for their reports. Think of this as a lighter-touch version of the ‘reasonable assurance’ required for financial reporting, in which the third-party assurer checks only for signs of problems in the data, but stops short of confirming that the numbers are accurate. In the reports filed so far, companies are overwhelmingly using the Big Four accounting firms — KPMG, PwC, EY and Deloitte — for this service.”
While these results are encouraging, last year’s reports were published in line with the original CSRD and European Sustainability Reporting Standards (ESRS). Since then, the Omnibus simplification package passed, reducing the number of entities required to report under the CSRD. Additionally, the EU is working on new simplified ESRS, which will substantially shrink required data point disclosures. We’ll see how these changes affect report quality going forward and whether they continue to improve or take a step back.
Our members can learn more about CSRD reporting here.
If you’re not already a member, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. But it will probably pay for itself before then. Members also save hours of research and reading time each week by using our filtered and curated library of ESG/sustainability resources covering over 100 sustainability subject areas – updated daily with practical and credible information.
Practical Guidance for Companies, Curated for Clarity.
