As the deadline for the European Union’s Corporate Sustainability Reporting Directive (CSRD) approaches, sustainability professionals are expressing frustration with the challenges of meeting the directive’s requirements. With less than six months to go, concerns over double-materiality assessments and data collection gaps are growing, according to a recent survey by sustainability consultancy SB+CO. The survey gathered insights from over 30 senior sustainability and finance leaders from large corporations, revealing widespread dissatisfaction with the lack of clear guidance from the EU.
Key concerns highlighted include the absence of detailed guidelines and the short timelines for implementation. The CSRD, which mandates that companies report on their sustainability performance with the same rigor as financial performance, is proving to be a significant burden for businesses, particularly those reporting in 2025 and smaller enterprises. Many companies are struggling to gather the necessary data and are uncertain about how to conduct double-materiality assessments and ensure compliance.
Nick Wyver, Consultancy Director at SB+CO, pointed out that the ambition of CSRD is clashing with the practical realities of implementation. “CSRD is effectively trying to make sustainability data on a par with financial data. It took 100-plus years to evolve a system of financial reporting, and 20-plus years to evolve the system of carbon reporting. Suddenly, CSRD also asks for reporting on companies’ impact on a whole range of topics that businesses just don’t have the data for — from biodiversity impacts through to impacts on indigenous communities,” he said.
The lack of clarity on how to achieve compliance has left companies working towards targets without a clear understanding of the criteria against which they will be assessed. This uncertainty is exacerbated by the complexity of the directive, which requires reporting on over 1,000 data points, placing a heavy burden on businesses.
The lack of clear guidelines on conducting double-materiality assessments and assurance processes is causing additional challenges for sustainability practitioners. While the European Financial Reporting Advisory Group (EFRAG) has attempted to offer flexibility in how companies disclose their information, this has inadvertently complicated matters. According to Wyver, the freedom for companies to determine their materiality assessments and set thresholds has, paradoxically, made the process even more difficult.
Phoebe Whittome, Sustainability Strategy Director at SB+CO, stressed the importance of adopting practical strategies. She recommended that companies develop a clear compliance plan, whether it involves a simple checkbox approach or a more integrated sustainability strategy. “It’s going to be a bumpy ride, but over time, reporting will get easier, and both pieces of regulation are important steps forward,” she said.
Whittome anticipates that the first round of CSRD disclosures will show considerable variation in how companies report and what they consider material. She expects that, as best practices develop, companies will adjust their approaches accordingly.
The guidance on double-materiality assessments and assurance was released too late, leaving many questions unanswered. Both Whittome and Wyver agree that this guidance needs to be expedited to ensure smoother compliance.
Despite these challenges, optimism remains. While SB+CO’s interviewed leaders are not seeking to change the directive at this point, they advocate for improvements in guidance, communication, and timelines to enhance the accuracy and robustness of disclosures. Some companies may deliberately miss compliance deadlines to push the EU to address these issues.
Wyver and Whittome advise sustainability leaders to be pragmatic and clear about their goals, whether aiming for basic compliance or integrating sustainability into core operations. They recommend developing a comprehensive plan and engaging the entire organization in the process, acknowledging the need for extensive education and upskilling beyond just the sustainability function.
“It is going to be a bumpy ride, and it will be hard for a lot of businesses to get going,” Wyver states. “Over time, though, reporting will get easier — and fundamentally we think both pieces of regulation are important steps forward.”
Whittome added, “We are starting to see practitioners reflect on the benefits of having gone through the CSRD process, and [they] can see some of CSRD’s initial ambition emerging as a practical reality.”
