The European Union's Corporate Sustainability Reporting Directive (CSRD) has introduced far-reaching changes impacting how companies report their sustainability impacts, pushing for greater transparency, consistency, and accountability. 

By treating sustainability reporting like financial reporting, the EU has made non-financial ESG data fundamental to a company’s performance. With the first wave of reports under the European Sustainability Reporting Standards (ESRS) starting to go public, from companies like Maersk, Novo Nordisk, and Carlsberg, we are beginning to see how organizations respond to the new requirements. These initial reports, covering 2024 data, are being filed by a cohort of large public companies, many of which were already subject to the previous Non-Financial Reporting Directive (NFRD). As such, their reporting practices are likely mature and established. The reports will set a benchmark for future disclosures and offer valuable insights into how the CSRD is reshaping corporate sustainability practices across Europe and beyond. 

At thinkPARALLAX, we have the privilege of working with a range of clients across industries and sectors, many of whom are preparing to publish their first ESRS report or conduct their first double materiality assessment. We’ve gained some interesting insights and learnings from behind the scenes. 

Please note: The CSRD omnibus package will be released any day, which will change reporting requirements. We will update this article as soon as we know more.

The shifting sustainability landscape

It took nearly four years for EU governing bodies to draft and finalize the ESRS. And even though the ESRS was formally adopted by the EU in 2023, the prevailing ESG winds are shifting again. In the EU, member states are trying to lighten the reporting burden for companies. The EU has responded with a promise of an omnibus package that will simplify the reporting process. Many of the changes are anticipated to be directed at smaller businesses and will be revealed in March 2025. For now, the directive remains in place and EU Commission President Ursula von der Leyen has reiterated her stance that the EU remains committed to stay the course on the goals set out in the European Green Deal’. 

While scaling back reporting requirements might offer relief for some, the most strategic move now is to continue as if the full remit of CSRD is still in place (because it is). Companies that leverage ESRS principles such as double materiality, strategic governance, and a proactive approach to material impacts, risks, and opportunities, should see business benefits, regardless of regulatory requirements. Such companies will protect themselves from real dangers in the short term while preparing for reporting obligations — even if they are eventually slimmed down. 

Ultimately, CSRD is here to stay in one form or another. The law is critical to the EU’s goal of achieving greater sustainability in the next few decades. It’s the scale and the timing that may be up for further debate. 

Key learnings from the first wave of CSRD reports

1. Double Materiality: The foundation of CSRD reporting

One of the most significant shifts with CSRD is the concept of double materiality, which requires companies to assess both a company’s impact on the environment and society and how sustainability issues affect the business. This principle is central to the ESRS framework, and its implementation is essential for producing meaningful and reliable sustainability reports.

The importance of double materiality cannot be overstated. Organizations need a robust, methodical approach to identify material issues, ensuring they focus on the most relevant sustainability risks and impacts. While the ESRS requires a DMA to be carried out, what many do not realize is that there is no one-size-fits-all process that must be followed. It’s principles of stakeholder engagement and value chain assessment (among others) that need to be applied.  As such, companies need to adopt a well-defined, structured approach to double materiality, starting with a thorough value chain assessment and stakeholder engagement process. The transparency of this process will be crucial to the credibility of the final report. Many of our clients who do not have to comply with CSRD are also conducting double materiality assessments in order to align with their peers. 

In light of recent media and political coverage about ESG and DEI backlash, a double materiality assessment is an effective antidote to political and ideological challenges to a company’s sustainability efforts. By focusing on what is material and not what is moral, companies tie their sustainability topics to business performance which helps maintain focus to what really matters. For example, if a company identifies diversity as a material topic because failure to attract a diverse workforce results in talent shortages and impacts their ability to produce their products, then investing in a program to attract workers from various backgrounds becomes a financially sound decision. 

Conducting meaningful stakeholder engagement tailored to the individual organization is a core tenet of a successful materiality assessment. We have ongoing conversations with our clients to design the most appropriate means of engaging stakeholders to assess potential impacts, risks, and opportunities. Focus groups, interviews, and deep research tend to provide the most value, but every organization is different, and we encourage clients to think about the purpose of the engagement and how it fits into the overall double materiality assessment. The first wave of ESRS reports are showing us that companies are challenged to truly assess impacts, risks and opportunities with stakeholders outside their organization relying on internal experts who are closest to understanding a topic’s material impacts and associated risks and opportunities. 

If companies fail to undertake this assessment in a systematic, rigorous way, their reports can quickly become too broad or superficial. This can result in lengthy reports that lack focus, leaving stakeholders unsure about what the company actually does to address its most pressing sustainability challenges.

2. Collaboration across departments: Finance, legal, internal audit and sustainability teams must work together

The introduction of mandatory limited assurance over sustainability disclosures has fundamentally shifted the role of corporate departments in sustainability reporting. Where finance teams were once primarily responsible for financial reporting, they are now tasked with ensuring that sustainability data is accurate, reliable, and audit-ready. Legal teams also play a more significant role, ensuring compliance with regulations and addressing potential liabilities. Meanwhile, sustainability teams focus more on strategy, target-setting, and driving long-term sustainability outcomes rather than just collecting data.

This increased collaboration between these functions is a positive development but also brings new challenges. During the first year of CSRD reporting, companies may encounter confusion about who owns what parts of the reporting process, particularly regarding data collection, materiality assessments, and verification. Without clear roles and responsibilities, there is a risk of overlap, duplication of effort, or, conversely, gaps in important reporting areas.

To avoid these pitfalls, we recommend establishing clear lines of responsibility by appointing a senior leader from an executive function — either from the finance or sustainability department or even a neutral leader with experience in both areas — to take overall responsibility for the CSRD reporting process. This individual can help coordinate efforts across teams, make key decisions, and ensure that reporting aligns with the company’s broader strategic objectives while giving the project a voice at executive-level discussions.

Read more: Beyond the report — embedding sustainability into your company’s core

3. Beyond compliance: The need for a compelling sustainability narrative

While some companies have chosen to issue a simple sustainability statement in their first year of reporting, many are taking a more comprehensive approach, recognizing the value of storytelling in their impact communications. These companies are looking to move beyond compliance and communicate the broader impact of their sustainability efforts, particularly in areas like resilience, long-term value creation, and environmental and social contributions.

However, the mandatory assurance requirement for sustainability disclosures means that companies must focus on fact-based reporting rather than anecdotal or subjective narratives. This shift is in line with the growing demand for more credible, reliable sustainability data that stakeholders can trust. Greenwashing, where companies overstate or misrepresent their environmental impact, remains a major concern, and the CSRD aims to stop this by requiring verifiable evidence to back up sustainability claims.

That said, storytelling is not disappearing entirely. In the first ESRS reports published in 2025, some companies use their upfront introductory section to tell their story about sustainability and what it means to their company. While the CSRD report may become more data-driven, companies can engage their stakeholders and convey their commitment to sustainability. This could be achieved through other channels, such as dedicated sustainability reports, websites, and internal or external campaigns. Ultimately, sustainability is still about driving positive change, but how companies report on it will be grounded in concrete, evidence-based outcomes.

Read more: Rethinking sustainability reporting: tailoring communications for maximum impact

‍4. Value chain implications

CSRD goes beyond a company’s operations and requires a look across the entire value chain, including the activities, resources, and relationships the company uses and relies on to create its products or services, from conception to delivery, consumption, and end-of-life, across departments, supply chains, distribution channels, customers, financing, geographical, geo-political, and regulatory environments in which the company operates. For example, companies not already in scope to report under ESRS will be impacted indirectly as supply chain partners of larger entities. This poses challenges in measuring, monitoring, and communicating ESG progress. 

The challenges of CSRD compliance should not be underestimated — gathering

and validating the information across large organizations while developing auditable data trails is a substantial undertaking for any business. Selecting the right technology, resourcing suitably, and implementing the appropriate change management is a complex challenge for companies. For example, a client that identifies climate change as material might need to conduct a greenhouse gas emissions audit, calculate electricity consumption (which might be hard to capture if premises are leased), and then start to focus on strategy, governance, and policy development before determining targets and goals for reductions. In reality, it can take a company considerable time to achieve success in the initial step of measuring their emissions, as such the ESRS is forcing action and accountability. 

Our large corporate clients are grappling with the scale of the disclosure requirements, the challenge of identifying the right tools to track the data, resourcing for the required staffing capability, and the necessary audit trails, which some businesses are establishing for the first time. For each identified material topic, a multitude of tasks must be undertaken to achieve a minimum level of acceptable compliance. 

‍5. Will the ESRS achieve its goals?

The ultimate aim of the CSRD and ESRS is to create a more standardized, transparent, and reliable system of sustainability reporting that will build stakeholder trust and support the transition to a more sustainable economy. The first wave of reports provides valuable insights into how well the implementation of the ESRS is working in practice. While it is still too early to draw definitive conclusions, it is clear that the ESRS is driving companies to adopt more rigorous, data-driven approaches to sustainability reporting.

At the same time, the introduction of mandatory assurance requirements and the emphasis on double materiality are pushing companies to improve their sustainability practices and disclosures. This will help combat greenwashing and ensure stakeholders have access to reliable information for basing their decisions.

The outlook is positive, and while challenges lie ahead, the ESRS is a step in the right direction. Over time, as companies refine their reporting practices and gain a deeper understanding of the regulatory framework, the CSRD and ESRS will be crucial in fostering greater corporate accountability and advancing sustainability goals across Europe and beyond.

Need help navigating ESRS and CSRD? We're here to help. Reach out to Niamh O' Mara, our Senior Director of Sustainability Strategy, anytime.