The Corporate Sustainability Reporting Directive (CSRD) marks a new era in corporate accountability and transparency within the European Union. As businesses gear up to produce their first reports under this directive, it’s clear that the CSRD is more than just a regulatory requirement, it’s a strategic opportunity for companies to demonstrate their commitment to sustainability and to align their practices with broader societal goals.

This article provides a practical guide to understanding the CSRD, its requirements, and how businesses can effectively prepare for the first reporting cycle.

What is the Corporate Sustainability Reporting Directive (CSRD)?

The CSRD is a regulatory framework established by the European Union to standardize and enhance the quality of sustainability reporting among companies operating within its jurisdiction. This directive significantly broadens the scope of the previous Non-Financial Reporting Directive (NFRD), expanding the number of companies required to report and deepening the level of detail expected in those reports.

Overview of the first reports

As the CSRD takes hold, more than 250 companies have already published their first reports. According to Cooley’s analysis, these reports vary widely in structure and length, with most falling between 50 to 120 pages. This variation is largely dependent on the industry in which the company operates and the complexity of its sustainability strategies. Notably, the average year-over-year page increase for sustainability reporting is approximately 32%, as companies delve deeper into materiality assessments, ESG strategies, data collection processes, and external assurance methods.

Design and presentation

The design and presentation of these reports have also seen significant innovation. Around 60% of the reports feature high-quality visuals and infographics, making complex data more accessible and engaging for a wider audience. A growing trend identified by Cooley is the use of interactive PDF formats and digital reports, which not only enhance readability but also help stakeholders digest the information more easily. Additionally, about 70% of these reports incorporate visual elements like charts and graphs, effectively communicating key sustainability metrics and strategies. Many companies are choosing to integrate sustainability reporting with their annual financial reports, reflecting the view that sustainability is becoming an integral part of corporate strategy, rather than a separate endeavor.

Content insights

A common theme in these reports is the prominence of materiality assessments, with companies dedicating an average of 10 to 15 pages to evaluating their environmental, social, and governance (ESG) impacts. According to Cooley’s findings, about 80% of companies have aligned their reporting with established frameworks such as the Global Reporting Initiative (GRI), while others incorporate standards from the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB). This alignment underscores the growing complexity of sustainability reporting and demonstrates that companies are not only meeting CSRD requirements but also positioning themselves in line with global best practices.

Engagement with external auditors

The PwC 2024 Global CSRD Survey revealed that 97% of professionals at global companies feel prepared to report under CSRD by 2025. Approximately 80% of respondents have engaged an assurance provider early in the process, with 49% working with their financial auditor. A notable feature of these reports is the high level of engagement with external auditors, with approximately 90% of companies opting to verify their sustainability data. This approach demonstrates a strong commitment to transparency and accuracy, helping to build stakeholder confidence in the reported information.

Challenges and opportunities

While many companies have embraced the new reporting standards, the process has not been without its challenges. Data collection, the alignment with multiple sustainability frameworks, and the availability of high-quality data have been the most frequently cited obstacles, according to PwC’s findings.

However, there have also been significant opportunities, as nearly 40% of companies reported realizing cost savings or operational efficiencies through their sustainability data collection efforts.

The most common challenges companies face include the availability and quality of data (59%), the complexity of their value chains (57%), and staff capacity (50%). Despite these hurdles, many businesses have reported substantial benefits, such as improved environmental performance (57%), better stakeholder engagement (52%), and enhanced risk mitigation (51%). These benefits demonstrate the potential for CSRD compliance to drive not just regulatory fulfillment but also tangible business value.

Real-world examples

Insights from real-world reports highlight how companies are adapting to CSRD requirements. For instance, a multinational manufacturing company published an 85-page report focused heavily on energy consumption and carbon footprint, using infographics to make key metrics more accessible. Cooley’s review notes the interactive digital format of this report, allowing stakeholders to filter data by region and product line. Similarly, a financial services firm produced a 65-page report emphasizing ESG investment strategies and the integration of sustainability metrics into their risk management processes. Both examples underscore how companies are leveraging design and digital tools to align with CSRD while making complex sustainability data more digestible for stakeholders.

The Future of sustainability reporting

The impact of the CSRD is already shaping the future of sustainability reporting in significant ways. The directive’s emphasis on double materiality—assessing both how companies impact the environment and how sustainability risks affect the business—is pushing companies to develop more comprehensive and audited reports. This shift towards greater transparency and accountability is likely to influence global reporting standards, as Cooley suggests, particularly as non-EU companies with significant operations in the EU are also required to comply.

Moving forward, companies will need to stay informed about regulatory changes and continuously adapt their reporting practices. The integration of sustainability into core business strategies and the use of advanced technologies to streamline data collection and reporting will be crucial for maintaining compliance and competitiveness in a rapidly evolving market.

Conclusion

The Corporate Sustainability Reporting Directive (CSRD) represents a significant evolution in corporate sustainability reporting. While the directive introduces new challenges, it also offers substantial opportunities for companies to enhance their sustainability practices, build stronger stakeholder relationships, and gain a competitive advantage in the marketplace.

By understanding the CSRD’s requirements and taking proactive steps to align with the European Sustainability Reporting Standards (ESRS), companies can not only meet regulatory expectations but also drive meaningful change within their industries. In an increasingly sustainability-focused world, those who embrace transparent and accountable reporting will be best positioned to thrive.

Sources

Cooley: Insights on the structure, average length, and trends from the first wave of CSRD reports were referenced from Cooley’s article titled "Insights From Early Adopters of EU’s Corporate Sustainability Reporting Directive"​(Home // Cooley // Global Law Firm).

PwC 2024 Global CSRD Survey: Statistics on the challenges, readiness, and benefits of the CSRD implementation were sourced from PwC's "2024 Global CSRD Survey"​(PwC).

IR Magazine: Additional insights about companies' preparedness for CSRD and engagement with assurance providers came from IR Magazine's article "CSRD readiness soars midway through the first reporting year"​(IR Magazine).